The legislature’s Finance Committee on Dec. 20 approved an amendment to lower the import tariff on champagne from 20 percent to 10 percent. Although the proposal only applies to champagne and not other sparkling wines, it shows the legislature’s willingness to boost Taiwan’s diplomatic relations with the EU.
The change makes sense. Taiwan’s import tariff on red and white wines is 10 percent, but the tariff on champagne and other sparkling wines is twice as much, even though the Alcohol and Tobacco Tax Act (菸酒稅法) defines traditional and sparkling wines simply as “brewed alcoholic beverages.”
The only questionable aspect of the proposed amendment is why the tariff on champagne — wines from France’s Champagne region — would only be half of that for other sparkling wines.
Some East Asian countries, including Japan, Singapore and South Korea, do not impose tariffs on imported wines, while the Philippines’ tariff is only 5 percent. Cutting the existing tariffs would therefore be an effective step toward reducing trade barriers between Taiwan and France.
Still more important is the timing of the proposed tariff adjustment. In the summer of 2020, France agreed to allow Taiwan to open a new office in Aix-en-Provence to bolster bilateral economic and cultural exchanges, and in May last year the French Senate voted unanimously to support Taiwan’s extensive participation in international organizations.
The European Chamber of Commerce Taiwan has for many years called for this tariff cut. Democratic Progressive Party Legislator Michelle Lin’s (林楚茵) decision to bring this proposal to the committee at the end of last year is a positive and timely response to the aforementioned developments, symbolizing that Taiwan attaches great importance to meaningful relations and cooperation with Europe, and especially the EU’s 27 member states.
The final aspect to consider is the proposal’s effectiveness. The Ministry of Finance reported that reducing tariffs on champagne would lower revenue by about NT$59.67 million (US$2.16 million), but could generate greater importation and consumption of champagne that would in turn generate NT$5.97 million in tariffs, NT$3.27 million in alcohol taxes, NT$4.46 million in business taxes and NT$1.03 million in income tax.
If those estimates are correct, the annual net loss of tax revenue would be about NT$44.94 million, a mere 0.04 percent of the treasury’s NT$1.8 trillion annual tax revenue. This would have a negligible impact on the nation’s finances.
The champagne tariff reduction would also have little effect on Taiwan’s alcoholic beverage industry, given that there are no competing or alternative products in the domestic market.
Meanwhile, consumers would benefit from lower prices resulting from the reduced costs borne by wine importers, while also seeing a wider range of choice in the market.
France is Taiwan’s fifth-largest European economic and trade partner and its 20th-largest in the world.
The first half of this year happens to be the period in which France holds the rotating presidency of the Council of the EU, as it does only once in every 13 years.
If the Legislative Yuan speeds up passage of the proposed amendment, it is sure to help Taiwan develop multilateral relations with the EU and its member states, and bring new opportunities for international trade.
Elvis Lee is an adjunct assistant professor in Fo Guang University’s Department of Public Affairs.
Translated by Julian Clegg
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