Mon, Dec 13, 2010 - Page 2 News List

Increase in cigarette tax mulled

PAYING THE COST:The NHI is mainly funded from insurance premiums, but the tobacco surcharge raises NT$36 billion a year after the surcharge hike last June

Staff Writer, with CNA

Raising the surcharge on cigarettes to generate revenue for the financially ailing national health insurance (NHI) system, as some have proposed, could only be done if the law were revised, a Department of Health (DOH) official said.

An amendment to the Tobacco Hazard Prevention Act (菸害防制法) would have to be proposed and passed if the government wanted to increase the tobacco health and welfare surcharge, Bureau of Health Promotion Director -General Chiou Shu-ti (邱淑媞) said.

The department doubled the tobacco health surcharge to NT$20 per pack of cigarettes last year by the same process she said.

Chiou was responding to a suggestion made earlier in the day by Vice Premier Sean Chen, who said that increasing the tobacco surcharge would be the best way to bridge the health -insurance system’s deficit if expanding -premium revenues did not fully cover it.

Although the law stipulates that the surcharge can be reviewed every two years and allows it to be raised further, Chiou said she believed another hike would still not be enough to free the health insurance system from its financial woes.

Raising the surcharge again would not necessarily mean that the NHI’s revenue would continue to grow, Chiou said, because the higher prices charged for cigarettes could just as easily reduce the smoking population and therefore the revenue base.

According to the department the Bureau of National Health Insurance had an accumulated deficit of about NT$53.3 billion (US$1.7 billion) as of the end of August.

Most of the compulsory system’s revenue comes from insurance premiums, but it has also drawn funds from the tobacco surcharge, which raises NT$36 billion a year after the surcharge hike took effect in June last year, nearly double the NT$20 billion a year it raised previously.

The NHI system received 70 percent of the revenue, or about NT$25 billion, this year to help fund its operations.

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