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Taiwan proposes new energy & emissions taxes

The Cabinet’s Tax Reform Committee yesterday reached a consensus to introduce an incremental levy on gasoline, diesel, gas and other energy sources, as well as on greenhouse gas emissions, but remained undecided over proposed pollution taxes. 

The reforms, seeking to enhance energy conservation and rein in the nation’s carbon dioxide emissions, will head next to the Cabinet and legislature and, if agreed, are expected to take effect in 2011.

“The reform committee wrapped up the discussion and concluded it is better to push through things agreed on first, then address differences later,” Deputy Minister of Finance Chang Sheng-ford (張盛和) told reporters after the committee meeting. 

The task force proposes attaching an energy tax of NT$1.7 to each liter of oil products sold and recommends an extra NT$750 greenhouse gas tax for each tonne of carbon dioxide emissions.

If passed into law, the energy tax would rise to NT$24.45 in the 10th year for gasoline and NT$21.71 for diesel — both taxes raising gasoline costs by NT$26.15 per liter, the committee’s report showed.

The energy and carbon taxes are expected to sap the state coffers by NT$8 billion (US$247 million) in the first year because of supporting subsidy programs, but generate NT$164.7 billion and NT$239 billion in tax revenues by the 10th year, the report said.

Chang said Cabinet officials and lawmakers may alter the tax rates. Vice Premier Eric Chu (朱立倫), who heads the committee, said the Cabinet would respect the committee’s findings, but would factor in public sentiment before reaching a decision. 

Minister of Finance Lee Sush-der (李述德) told a legislative hearing that the tax reforms would be implemented in 2011 if the proposal clears the legislature next year. The finance ministry intends to use extra tax funds to subsidize low income earners, public transport and other reforms, the report said. 

Premier Wu Den-yih (吳敦義), however, told reporters earlier yesterday that the Executive Yuan had yet to finalize a timetable. 

Wu said the Executive Yuan needed to follow due procedure, including listening to the opinions of economically disadvantaged groups, submitting relevant proposed amendments to the legislature and waiting for the bills to clear the legislative floor, before the government could actually levy the taxes.

“There is no need for everyone to panic over the tax plan as if we were going to levy the taxes tomorrow,” Wu said.

Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) voiced concern that the tax plan would increase the financial burden on ordinary people as Taiwan Power Company (Taipower, 台電) was likely to raise electricity rates by 40 percent over the next decade to reflect growing costs. 

The state-run utility firm accounts for 51.13 percent of the nation’s industrial carbon dioxide emissions, 60.5 million tonnes last year, topping all other companies, a report by the Council for Economic Planning and Development said.

Taipower is followed by China Steel Corp (中鋼), China Petrochemical Development Corp (中石化) and CPC Corp, Taiwan (CPC, 台灣中油), which produces 15.15 percent, 9.89 percent and 4.34 percent of greenhouse gas emissions respectively, the report said. Total industrial carbon dioxide emissions reached 118 million tonnes last year. 

The green tax reform aims to cut carbon emissions by 17 million tonnes in the first year and 46 million tones by the 10th year, or 39 percent of the target set at the National Energy Conference earlier this year.

In response to the news, the Ministry of Economic Affairs yesterday said it would propose lower tariffs in order not to harm local companies’ competitiveness on the global stage.

“It is the way to go to impose the energy tax [to be in line with international trends], but the rates should be reasonable,” Minister of Economic Affairs Shih Yen-shiang (施顏祥) told legislators during a question-and-answer session at the legislature yesterday. 

With the tariffs proposed by the Ministry of Economic Affairs, total tax revenues collected by the 10th year were estimated at NT$151.3 billion — much lower than the NT$435.1 billion that would be collected using the Ministry of Finance’s proposed rates.

Shih said it was imperative that the taxes did not hurt local companies’ international competitiveness nor burden the public.

By Crystal Hsu
Tuesday, Oct 20, 2009

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10/31/2009 – 16:52

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