Tue, Nov 09, 2004 - Page 10 News List

Television vendors laud reduced tax

LOWER COSTS The government's move to halve a 13 percent tax should help manufacturers cut costs, some say, but others thought the effect would be minimal

By Lisa Wang  /  STAFF REPORTER

The government's decision to halve a commodity tax on the digital television sector will boost stagnant sales of the pricey sets by bringing down manufacturing costs and retail prices, local TV vendors said yesterday.

The tax breaks came unexpectedly as the nation's TV makers were about to give up their long-term lobby for the removal of a 13-percent commodity tax imposed on all home appliances, including TVs and freezers, over the past three decades.

"I'm overwhelmed by the news, though the 50-percent reduction is still far away from our request for a sweeping tax exemption," said Frank Lee (李敦仁), vice president of television maker Taiwan Kolin Co (歌林), in a phone interview with the Taipei Times.

The government said it will trim by 50 percent the commodity tax on digital TV-related industries over the next five years in a move to boost the penetration of digital TVs.

TV makers, liquid-crystal-display (LCD) panel makers and set-top box suppliers are some of the major beneficiaries of the planned tax cuts, according to the government.

The tax cuts will at least help local TV vendors reduce costs and the positive effect will eventually spread to end users in terms of lower TV prices, Lee said.

"Consumers may find digital TVs a little bit more acquirable after retail prices drop in line with the tax cut," Lee said.

Taiwan Kolin said it expects to sell 100,000 sets this year to the nation's 1-million set TV market. More than a third of the amount will have built-in TV tuners that can switch analog signals to digital, Lee added.

But Sampo Corp (聲寶), which is one of Taiwan's largest TV vendors, reacted cautiously to the tax adjustment.

"The tax breaks may look like a boon for TV makers at first sight, but it is still hard to say how big the effect will be," Sampo spokesman Gary Chen (陳昭宙) said.

What's more, because local TV makers are moving their assembly lines overseas for better cost control, savings from the new tax scheme may be limited, Chen added.

Taiwanese TV makers including LCD-TV pioneer Teco Electric & Machinery Co (東元) are looking for cost-saving factories in lower labor-cost China, or in Eastern Europe to evade high TV import tariffs.

Tatung Co (大同) said the tax reduction will provide little help to local companies' competitiveness as LCD monitors, which often double as digital TVs after being connected to a set-top box, are entirely exempt from the heavy tax.

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