Private oil refiners are not the only ones who will benefit from a cut in the commodity tax on gasoline and diesel, Minister of Economic Affairs Yiin Chii-ming (尹啟銘) said yesterday.
“The commodity tax is an additional tax. The tax cut [on gasoline and diesel] will reduce government tax revenues, but will also benefit domestic consumers,” Yiin said.
Yiin’s remarks were in response to media speculation that the tax cut would only benefit Formosa Petrochemical Corp (台塑石化).
The tax cut was aimed at addressing the impact of soaring oil prices on consumers, Yiin said.
Democratic Progressive Party (DPP) caucus whip William Lai (賴清德) said last week that the commodity tax cut and the Cabinet’s decision to use the costs for state-owned oil refiner, CPC Corp, Taiwan (CPC, 台灣中油) as the basis for price adjustments would both benefit Formosa Petrochemical, a Central News Agency (CNA) report said.
As Formosa Petrochemical’s costs are lower than CPC’s, Lai said the government should use Formosa Petrochemical’s costs to determine domestic fuel prices, the report said. In addition, Lai opposed the commodity tax cut, suggesting the government used such taxes to subsidize CPC, CNA reported.
After the tax cut, Lai estimated that the treasury would receive NT$9.7 billion (US$319 million) less in tax revenues in the next six months, whereas Formosa Petrochemical would make profits of nearly NT$7 billion this year on the back of the government’s policy, the report said.
To comply with the Cabinet’s policy, the Ministry of Finance lowered the commodity tax on domestic gasoline and diesel for six months, effective last Wednesday.
It was estimated that the policy will cost government coffers nearly NT$10.05 billion before Nov. 27, the Chinese-language Commercial Times reported.
To ease the increases on oil product prices, the Cabinet announced it would lower the commodity tax on gasoline by NT$1.3 per liter, or 19 percent, from NT$6.83 per liter to NT$5.53 per liter.
The commodity tax on diesel was lowered by NT$1.4 per liter, or 35 percent, from NT$3.99 to NT$2.59.
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