Thu, Apr 26, 2012 - Page 1 News List

Business leaders call for electricity rate rise in stages

By Crystal Hsu  /  Staff reporter

Business leaders yesterday urged the government to ease electricity price increases and adjust the rates in stages to reduce the impact on the public and industry.

More than 20 leading figures from the Chinese National Association of Industry and Commerce (工商協進會) issued a joint statement — including a plea to exempt individual investors from a proposed capital gains tax — after a meeting with Premier Sean Chen (陳冲) and ministers.

The influential trade group, which represents about 1,400 companies, said the government should allow companies and households more time to prepare for higher energy costs.

Starting on May 15, electricity prices will rise by an average of 16.9 percent for households, 30 percent for commercial establishments and 35 percent for industrial users — with rates during off-peak hours jumping 60 percent, the Ministry of Economic Affairs announced earlier this month.

The government has said the price adjustments are necessary to keep state-run Taiwan Power Co (Taipower, 台電) afloat as it has accumulated NT$132.2 billion (US$4.48 billion) in net losses after freezing rates in 2008.

The association said it understood the need for rate increases given the uptrend in international oil prices, but suggested milder increases instituted in phases.

Manufacturers are particularly concerned about the 60 percent increase during off-peak hours, when sizable production activity takes place to take advantage of the discount, the association said.

The price increases are expected to raise overall production costs by 0.48 percent, with the manufacturing bearing the brunt, the Bureau of Energy said.

Commercial facilities are worried that steep increases in electricity outlay would sap earnings, the association said.

Electricity charges at the nation’s leading convenience store chain 7-Eleven are about NT$800 million a year and NT$500 million at FamilyMart Co (全家便利商店), the second-largest, the association said.

Minister of Economic Affairs Shih Yen-shiang (施顏祥) agreed to review the association’s suggestions, but said other sectors would have to bear a heavier burden if the load were taken off industry.

The trade group also questioned the wisdom of taxing capital gains on securities investments for individual investors.

The association also suggested that if the government imposes a capital gains tax on futures transactions, it should scrap the transaction tax.

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