Tue, Jul 08, 2003 - Page 10 News List

MOEA mulls cutting electrical appliance tax

By Jessie Ho  /  STAFF REPORTER

A Ministry of Economic Affair's official yesterday confirmed the ministry is suggesting that the commodity tax on electrical appliances should be jettisoned in view of increasing clashes over the definition of electronic appliances.

Currently, electric appliances such as flat-screen TVs, stereo equipment and refrigerators are subjected to commodity taxes ranging from 10 percent to 13 percent, while information-technology (IT) products are not.

"Over the past three years, disputes over whether to levy commodity tax on a certain products occurred because many IT products are integrated with electric appliances," Lo Ta-sheng (羅達生), an official at the ministry's Industrial Development Bureau.

The commodity tax is a form of excise tax imposed to discourage consumption of luxury goods. Last year, commodity-tax revenues totaled NT$143.6 billion. In the first five months of the year, a total of NT$58.74 billion was collected in taxes, a 6 percent increase from the same period last year, according to statistics from the Ministry of Finance.

One IT industry watcher, Chiu Pei-pei (邱蓓蓓), a legal consultant at the Taipei Computer Association (台北電腦公會), said businesspeople encounter problems when, for example, a flat-screen TV, is taxed after customs officials categorized it as a home appliance instead of an IT product.

"We've helped many members to negotiate with various government departments regarding the tax cases," Chiu said yesterday.

Another example is computer speakers, which customs officials said could be used as a TV-audio system and therefore should be taxed under the electrical appliance classification, Chiu said.

"The government should either scrap the commodity tax on all electrical items or lay out an explicit list of products to be taxed," Chiu said. "Or disputes will become more frequent as more consumer-electronic products are developed into IT peripherals."

One business leader in the electronics industry said the commodity tax should no longer be applied to general electrical products.

"Electrical appliances such as TVs and refrigerators are much cheaper now, as they have become daily necessities for every household," said Rock Hsu (許勝雄), chairman of the Taiwan Electrical and Electronic Manufactures' Association (電電公會).

"By making these products tax-free, we can lower selling prices and spur on consumption, which will bring more tax revenue for the government," he said.

Admitting that the legitimacy for a commodity tax on home appliances no longer exists, an official at the Ministry of Finance's Department of Taxation said yesterday, on condition of anonymity, that it will take some time to revise the tax policy, given the government's financial constraints.

For the first five months of the year, the government's total tax revenues fell 10.8 percent year-on-year to NT$504.8 billion, accounting for only 36.8 percent of the target set for the year, according to the finance ministry.

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