The Cabinet’s tax reform committee reached a preliminary consensus yesterday on asking government agencies to explore non-tax measures to boost energy conservation and cut greenhouse gas emissions before seeking to introduce a green tax.
Minister of Finance Lee Sush-der (李述德) held a press conference after business representatives raised concerns about the proposed tax reform.
The committee agreed in June to impose an incremental energy and environment levy by integrating 13 existing taxes to honor President Ma Ying-jeou’s (馬英九) campaign pledge to make the nation eco-friendly.
Lee said the committee was now not in a better position to guide the Ministry of Economic Affairs, the Council for Economic Planning and Development and the Environmental Protection Administration in exploring non-tax measures before invoking the tax reform.
Government agencies have been given a month to turn over their findings to the committee.
Those agencies could also encourage companies to upgrade their equipment and manufacturing process or adopt other measures to cut carbon emissions, Lee said.
“When non-tax measures prove insufficient, the government could consider imposing a tax,” Lee said. “The committee, created to review the taxation system, cannot assume responsibility for all policymaking.”
The minister said he was surprised by the committee’s green tax plan, which would generate more than NT$30 billion (US$9.2 million) in tax revenues in the first year of its institution. The amount is expected to exceed NT$800 billion in the 10th year, after which the tax rate would remain flat, the reform proposal said.
The government intends to use the revenue to cover losses arising from tax cuts on glass, rubber tires, drinks and electric appliances, as well as abolishing entertainment and postage taxes. The government has also mulled subsidizing public transportation and energy conservation research and development.
The business community remained skeptical, however.
Preston Chen (陳武雄), chairman of the Chinese National Federation of Industries (CNFI, 工業總會), said the government should think twice about the green tax, as it could hurt industries.
Chen, also a reform committee member, said China Steel Corp (中鋼), the nation’s largest steel maker, would have to pay more than NT$40 billion in environment taxes annually after the tax reform comes into force.
Chen said the government should draw up supporting measures before pursuing the tax reform.
State-run CPC Corp, Taiwan (CPC, 台灣中油) voiced worries it could bear the brunt of the tax reform, which proposes imposing an energy and environment tax of NT$10 on each liter of gasoline in the first year, with the rate increasing to NT$28.65 after 10 years.
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