The Cabinet yesterday approved an amendment to the Tobacco and Alcohol Tax Act (菸酒稅法) that, if passed by the legislature, would lead to a significant decrease in the tax on distilled liquor.
The move is seen as an attempt to push down the retail price of red-label rice wine, also known as salted rice wine, a commonly used cooking ingredient.
Should the amendment pass, the tax imposed on the wine would be cut from NT$111 to NT$30 per 600mL bottle.
An official, who was not authorized to speak publicly, estimated that the retail price for the wine per 600mL bottle might drop from NT$180 to as low as NT$60 following the tax cut.
Premier Liu Chao-shiuan (劉兆玄) was quoted by Executive Yuan Spokesman Su Jun-pin (蘇俊賓) as saying at a press conference that the practice would help reduce incentives for making illicit alcohol and ensure public heath.
Under the amendment, the alcohol tax will depend on the percentage of alcohol in the product, replacing the current “volume-based tax” imposed on distilled alcohol.
To comply with the national treatment principle of the WTO, the amendment will apply to domestic and imported distilled alcohol.
Rice wine was considered “hard liquor” — in the same category as products like brandy and whisky — in 1998 during negotiations over Taiwan’s entry into the WTO. Taiwan failed to get the US to agree to classify it as “cooking wine” for sales tax purposes.
Taxes on rice wine have been ratcheted up each year since 1998, resulting in a dramatic drop in rice wine sales.
Since 2002, the year Taiwan entered the WTO, the average yearly sales of legally produced rice wine fell to 7.5 million, 3.6 percent of the average yearly sales of 210 million between 1994 and 1996, Su said.
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