Finance ministry works to thwart kit

Out of concern for consumer safety, the Ministry of Finance may seek to ban on sales of Taiwan Sugar Corp's (Taisugar, 台糖) controversial do-it-yourself (DIY) rice-wine kit, Vice Minister of Finance Sam Wang (王得山) said in the legislature yesterday.

Wang warned that Taisugar's DIY kit includes a highly flammable bottle of 85 proof alcohol, a safety risk to consumers who will mix the ingredients by themselves.

Regardless, the ministry hopes to stem what they apparently see as an attempt to evade taxes.

"Even if Taisugar's rice-wine kit is allowed to hit the market, the ministry will still levy a NT$24.75 per bottle rice-wine tax," Wang told the legislature's finance-committee meeting yesterday morning.

Taisugar officials introduced the DIY rice-wine kit on Monday and plan to launch the product nationwide on Dec. 20.

Wang's new tax proposal will increasd the cost of Taisugar's innovative product by NT$20 per bottle, bringing its retail price closer to Taiwan Tobacco & Liquor Co's (台灣菸酒公司) NT$111 red label rice-wine.

If implemented, the tax will apply to copycat rice-wine kits, including the newly launched Kinka rice spirits (金花白酒), imported from China and priced at NT$60 per bottle, Wang said.

Taisugar's product, to be offered at a retail price of NT$85 per bottle, includes 30ml of alcohol produced from molasses, 135ml of ethanol made from fermented rice and 435ml mineral water. By skirting the NT$90 WTO tax on a 0.6L bottle of rice wine, Taisugar's kit is only subject to an NT$11 tax per liter of alcohol, thus paying less than NT$6 per bottle in taxes.

Minister of Finance Lin Chuan (林全) told the legislature on Monday that his ministry would reach a final ruling today on whether the Taisugar product will be allowed to be sold on the retail market.

In response to Wang's tax proposal, Taisugar Chairman Wu Nai-jen (吳乃仁) yesterday vowed to take legal action against the ministry over the potential ban, or higher rice-wine taxes on its product.

Wu said Taisugar did its legal homework and concluded that its DIY rice-wine kit breaks no laws.

"Based on what laws can the ministry levy an NT$24.75 rice-wine tax on Taisugar?" Wu asked.

Taisugar officials yesterday insisted that the product does not endanger the public's safety.

But an economics professor at National Taiwan University, Wu Chung-chi (吳忠吉), said Taisugar's 85 proof alcohol may require extra caution.

"The government's department of health or some food safety agency should test whether Taisugar's product is highly flammable," Wu Chung-chi said.

The ministry should not jump to any conclusions without conducting adequate testing on the product, he said. He suggested that Taisugar put a warning label on the product and educate consumers on the mixing process before sales begin.

Wu Chung-chi, who is also honorary chairman at the Consumers' Foundation (消基會), defended Taisugar's innovation, saying free-market competition should be encouraged. By raising taxes on Taisugar's product, the ministry appears to be trying to protect the Taiwan Tobacco's former monopoly status in the rice-wine market, the professor said.