Sun, Nov 25, 2001 page8

• Government making rice wine crisis even worse

  • By Jan Shoujung 詹守忠
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  The Wine and Tobacco Tax Act (菸酒稅法), forced on Taiwan by its accession to the WTO, has caused a run on red-label rice wine (紅標米酒). The price of rice wine, used in cooking, is set to rise from NT$21 to NT$120 when the act comes into effect next year. As a result, local stores are hoarding the wine, while the public is rushing to buy it, creating a shortage.

  The government has adopted a rationing measure to deal with the shortage, under which each household is required to show its household registration (戶口名簿) to buy up to six bottles of the liquor. Such a measure is obviously a step backward from liberalization. Isn't the government's move just another kind of vote-buying before the Dec. 1 elections? After the Executive Yuan began to draw up the wine and tobacco tax bill in 1996, many wholesalers started to hoard rice wine, leading to the shortage in the market today. The wholesalers who hoard the product will make huge profits next year.

  One way to avoid the problem is to allow competition. During the transition period before the implementation of the new act, the government should allow private wine-making businesses to provide alternative products, so the public won't be forced to hunt around for red-label rice wine. The best solution would be to implement the tax hike immediately and allow the market to return to normal at the new level.

  However, the government cannot leave the issue alone. Its new rationing measures failed to alleviate the shortage. This is because the government has not come to terms with the need to liberalize the market.

  Traditionally the government has regarded rice wine and cigarettes as necessities in people's lives and provided them cheaply. As a result, rice wine has become an integral part of the diet in Taiwan. Now, the government is adopting tax rates on rice wine and distilled alcohol in accordance with the rest of the world. The Executive Yuan, in fact, is using the excuse of WTO accession to raise the nation's wine and tobacco taxes. According to the new act, the government is allowed to levy lower taxes on weaker rice wine, with less than 20 percent alcohol, so that the public may enjoy cheap rice wine. But this will not help the government maintain its wine tax revenues because the same rate would also apply to imports of the same potency.

  The act went through its third reading in the legislature in April. But the government failed to enact it promptly. The DPP would never have to face today's difficulty if it had implemented the new tax act as scheduled last September.

  The rice wine shortage is a result of political interference. Now, the government is interfering with the matter again by implementing rationing. Discontent among the people will only rise further, as the government is compounding the problem.

  The DPP government, which is inexperienced, did not implement the former KMT government's new tax act on schedule and is living with the consequences. Not only has the government lost the opportunity of receiving NT$25 billion of taxes in the past year, but the DPP's election chances have also suffered.

  Jan Shoujung is an assistant to Taiwan Independence Party legislator Lee Ching-hsiung.

  Translated by Eddy Chang

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