Vice Premier Lin Hsin-yi (林信義) said yesterday the Executive Yuan has given the Ministry of Economic Affairs and Ministry of Finance one week to come up with a proposal to reduce the tax on rice wine tax in an effort to stamp out bootlegging production.
Back room bootleggers make the poisoned hooch by using lethal industrial alcohol to cut costs and boost profits. The fake rice wine is then sold at "discount" prices to unsuspecting customers who then consume the toxic liquid.
Lin said that Taiwan has paid "too high a price" for the fake rice wine which has reportedly caused more than 10 deaths and hospitalized many others over the past few weeks.
Lin made the remarks while speaking to the legislature's Finance Committee. Although he spoke on financial reforms, the issue of fake rice wine took center stage in the question and answer session.
KMT Legislator Yang Chiung-ying (
He said that Japan encountered the same problem in the past with sake. Japan dealt with the issue by first cutting its tax rate. Then after 10 years of effort to settle the disputes, Japan managed to solicit a four-year grace period from the international trade body. That gave the country a total of 14 years to deal with the problem.
Lin said that the government would "do its utmost" during its consultations with the US and the EU on cutting its rice wine tax under the WTO framework.
To facilitate its entry into the WTO, Taipei agreed to set a high tax on rice wine, which is listed under the category of distilled liquor, of NT$150 per liter for the first year of WTO membership and NT$185 per liter in the second year.
Although Taiwan can request to have consultations with other nations to seek a cut in its rice wine taxes or a change in its formula for levying taxes on distilled alcohol under the WTO framework, it will face difficulties if it chooses to do so as any such changes would violate the "national treatment" principle and go against Taiwan's WTO accession commitments, one foreign business leader said.
"The idea of trying to re-open WTO negotiations [on this] would be a very time-consuming process that will not be productive," Richard Vuylsteke, executive director of the American Chamber of Commerce in Taipei (AmCham), told the Taipei Times.
Vuylsteke said that Taiwan should focus its efforts on shutting down illegal production facilities.
National treatment mandates that any citizen of a party to a contract that signs an agreement or a treaty can enjoy the same rights and legal protections as citizens of any other party to the contract.
Taiwan had also promised as part of its WTO accession commitments not to change the taxes it imposes on cigarettes and wine within 30 months of joining the organization, which occurred on Jan. 1 of this year.
Lin said the government is confident that so long as the people act in unison -- and the government has the full support of the legislature -- national solidarity will give the consultation team a big boost in its dealings with the WTO.
Lin said that the government hopes to adopt a price-taxation formula for rice wine instead of the quantity-taxation formula currently in use.
Lin cited China and South Korea as examples of other WTO members who are already using the price-taxation formula.
He said that the government will try to explain to the US and to the EU about the unique nature of rice wine in Taiwan and will use the rice wine bootlegging problem the nation is facing to support its argument.
Lin also said that the government has other contingencies in the event that the consultations fail, although he would not divulge what they are.
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