The Ministry of Finance said it was inclined to make changes to a proposed energy tax, including calling it an “energy and environment” levy, to minimize resistance to the reform.
Early this month, the tax reform committee unveiled a tax reform plan under which the government would impose an energy levy on gasoline, diesel, fuel oil, natural gas and liquefied petroleum gas through incremental increases each year until 2019.
The reform plan, conducted by Chung-Hua Institution for Economic Research (中經院) President Shaw Dai-gee (蕭代基), would add an energy tax of NT$1.8 per liter to existing gasoline costs each year for the coming decade to help honor President Ma Ying-jeou’s (馬英九) campaign pledge to reduce greenhouse gas emissions and encourage energy conservation.
The government already adds a NT$6.83 commodity tax and NT$2.5 vehicle fuel fee on every liter of gasoline consumed.
Under Shaw’s plan, the costs would be incorporated into the energy levy, which would then total NT$11.13 per liter in the first year and increase by NT$1.8 per liter each year for the following nine years.
If realized, the reform would generate NT$36.1 billion (US$1.1 billion) in tax revenues in the first year and NT$92.6 billion in the second year with the sum expected to hit NT$650 billion in the 10th year, the report showed.
The ministry asked Shaw last week to trim the tax rates for fear the reform would run aground in the legislature given the size of the projected figures.
“The academic appeared receptive to the idea of [milder reform],” a ministry official said on condition of anonymity.
The ministry also decided to refer to the new levy as an “energy and environment” tax to make it sound more favorable to the public, the official said.
With a milder reform, some previously proposed tax cuts to ease the impact of the levy would be unnecessary, the official said, referring to a plan to lower personal and corporate income tax rates by 1 percent each year upon the institution of the green tax.
Furthermore, the ministry has dropped its plan to seek increased deduction amounts for taxable salary incomes, the official said.
However, the proposal to abolish entertainment and stamp taxes remains unchanged, the official said.
Also, the ministry would go ahead and scrap commodity taxes on rubber tires, drinks, plate glass and electric appliances once the new levy is in place, the official said, putting the tax losses at NT$20.7 million.
The tax reform committee is expected to reach a conclusion on the matter in October.
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