Taxes on cigarettes underwent a big change following the nation's WTO entry on Jan. 1. In addition to a minimum purchase tax of NT$11.8 imposed on a pack of cigarettes, a health tax of NT$5 was also levied.
Now Long Life cigarettes (長壽菸) retail for NT$35 per pack, including a total tax of NT$18.55. That's a tax rate of 53 percent. Most imported cigarettes retail for NT$50 per pack, with tax amounting to NT$24.3 -- a tax rate of 49 percent. Compared with developed countries, the retail prices and tax rates for cigarettes are apparently too low in Taiwan.
To address the cigarette tax issue, the Department of Health and the National Health Research Institute (國家衛生研究院) recently held an international convention at the Grand Hotel Taipei (圓山飯店). All participating experts urged Taiwan to continue raising cigarette taxes, both to replenish state coffers and to reduce the nation's smoking population as well as its per capita consumption of cigarettes.
Meanwhile, it is reported that some unemployed people have not joined the National Health Insurance (NHI,
Nearly 4 percent of Taiwan's population -- or more than 700,000 people -- either have not joined the NHI program or have stopped paying premiums.
In the interest of social justice, the government and society are obliged to provide unemployed and low-income families with basic health insurance protection, despite their inability to pay insurance fees.
The Department of Health and the Bureau of National Health Insurance
But the total value of the subsidies is not high enough to bridge the current shortfall. Furthermore, delayed payments owed by the patients still need to be made by installments, given the fact that the subsidies are aimed only at meeting urgent needs.
If the unemployed can find jobs, then, of course, they can and should pay back the fees. But today's high unemployment rate suggests that it is not easy for them to find jobs.
The unemployment situation is worsening in rural villages. The situation I have observed in the Hualien countryside was far worse than the government's unemployment figures suggest. It will not be remedied quickly.
I therefore suggest that the government review the current cigarette tax structure and raise the health tax on each pack of cigarettes from NT$5 to NT$10.
The additional NT$5 could be used to subsidize health insurance for underprivileged groups. This would increase the government's tax revenues by approximately NT$10 billion a year but the impact on consumers would be negligible.
Taiwan's cigarette prices would have to rise to between NT$75 and NT$100 per pack to achieve tax rates comparable to those of developed countries. In other words, there is still plenty of room for a tax hike on cigarette.
A moderate increase of NT$5 would greatly boost the nation's tax revenues but have no impact on the nation's cigarette companies or farmers or foreign cigarette firms. Nor would it encourage further smuggling.
The increased tax revenues would help provide medical care to financially underprivileged people. The measure would also facilitate the prevention of health problems caused by tobacco.
It is to be hoped that the media, elected officials and the public will face up to this problem and show their support for this proposal.
Yeh Ching-chuan is CEO of the John Tung Foundation.
Translated by Jackie Lin
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