The Cabinet’s Tax Reform Committee, which is to hold final discussions on green tax reform on Monday, is set to slash a proposed tax on carbon dioxide emissions from NT$2,000 per tonne to NT$750 per tonne to quell industry resistance.
Chung-Hua Institution for Economic Research president Daigee Shaw (蕭代基), who was commissioned to study the issue, said yesterday that he had no choice but to make concessions to facilitate reform.
His latest report calls for a NT$9.55 energy tax and a NT$0.17 greenhouse gas tax — slashed from NT$0.45 — for each liter of gasoline sold. Different levy rates would also apply to liquid natural gas, coal and other energy sources.
“The figures came after a string of consultations and bargaining,” Shaw said. “Critics remain skeptical.”
The proposed energy and carbon taxes for fuel would go up by NT$1.7 and NT$0.17 each year until they reach NT$24.45 and NT$1.7 respectively in the 10th year when an evaluation is recommended to consider rate adjustments, the report said. The proposed taxes would combine 13 existing environmental taxes and put tax rates at a level comparable to those paid in South Korea and Japan.
If realized, the reform would shrink the national treasury in the first year by NT$8.2 billion (US$254.8 million), but would create NT$435.1 billion in tax revenues in the 10th year, down from NT$810 million as previous proposals suggested, the report said.
The tax plan, which requires approval from the Cabinet and legislature, aims to reduce carbon emissions by 46.47 million tonnes in the 10th year — only 39 percent of the goal set by the National Energy Conference earlier this year, the report said.
Taiwan’s 23 million people rank among the top 20 per capita emitters of carbon dioxide in the world at 11.4 tonnes per person.
Shaw said the compromise is intended to ease the impact on sectors that consume a lot of energy as well as the overall economy because business representatives have frowned on the tax reform. The Ministry of Economic Affairs is collecting last-minute responses to the findings, the academic said.
To placate industry, the report suggests exempting energy product exports, certain fluorinated greenhouse gases and manufacturing raw materials from the tax altogether.
“The design is expected to minimize the impact of the green tax on the petrochemical industry,” Shaw said.
State-run CPC Corp, Taiwan (台灣中油) has voiced concerns that it would shoulder the brunt of the tax reform.
The additional tax revenues would be used to subsidize low-income earners and public transportation as well as fund tax cuts to encourage energy conservation and improve the nation’s finances, the report said.
Shaw objects to the idea of using the fund to subsidize companies for investment in energy conservation, saying the practice would only keep unprofitable firms alive and ultimately increase total carbon emissions.
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