Taiwan may face a tough job persuading WTO members to agree to a cut in the rice wine tax even after the legislature approved an amendment to the Tobacco and Liquor Tax Act (菸酒稅法) in an extraordinary session yesterday.
The passage of the amendment provides the legal basis for the government to halve the price of rice wine from NT$50 a bottle to NT$25. In submitting the proposal, the Cabinet said that rice wine is a cultural staple in cooking and should not be levied the same tax as high-proof alcoholic beverages.
However, WTO members have expressed concern that lowering the rice wine tax would put imported alcoholic beverages at a disadvantage.
Deputy Minister of Finance Chang Sheng-ford (張盛和) said that reducing the rice wine tax and prices would not undermine the nation’s commitment to the global trade body and the interests of foreign brewers.
Chang said the Ministry of Economic Affairs would continue to communicate with the WTO on the issue.
After Taiwan joined the WTO in 2002, the tax on rice wine was raised to the same level as imported distilled spirits at NT$185 per liter, causing the price of rice wine to jump to NT$180 per bottle from about NT$20
The legislature passed an amendment to the Tobacco and Liquor Tax Act in May last year to lower the tax rate on distilled spirits in a bid to prevent hoarding of rice wine and get rid of fake wine in the market. That caused the retail price of rice wine to drop to NT$50 per bottle, but several legislators said the price was still too high and urged the Ministry of Finance to launch a WTO campaign to lower prices to NT$25 a bottle.
Although the ministry warned that cutting the rice wine tax could cause trade disputes with WTO members, the Cabinet put aside the ministry’s concern and approved the draft amendment last month.
Since then, the wine tax has become a political issue that has cropped up time and again during elections, as candidates look for issues to stir public sentiment.
Chang said Taiwan did not push for a lower levy on rice wine during WTO accession talks, but the situation has changed.
The government is planning to propose a tax on beverages used in cooking, he said, adding that imported rice wine would also benefit from this lower tax rate.
This would show that Taiwan is not acting in favor of Taiwanese companies only, but is offering equal treatment to all WTO members, Chang said.
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