The government should overhaul its antiquated vehicle tax system, especially as Taiwan faces growing pressure from the US to reduce trade barriers amid the threat of a 32 percent “reciprocal” tariff on Taiwanese exports to the US. A logical starting point would be to reduce the excessively high commodity tax on vehicles, followed by a gradual lowering of tariffs on imported cars on a par with those levied by Taiwan’s trading partners.
For years, new car retail prices in Taiwan have been significantly higher than in many other countries. The reason is straightforward: Steep taxes on vehicles inflate retail prices and the overall cost of ownership. Despite this, the government has long resisted calls for reform. That stance is no longer sustainable. A comprehensive overhaul is long overdue.
Taiwan imposes duties of up to 52.5 percent on imported vehicles, comprising a 17.5 percent tariff, a 25 to 30 percent commodity tax and a 5 percent business tax, according to the Ministry of Finance. In addition, a 10 percent luxury tax is levied on vehicles with a retail price of more than NT$3 million (US$100,150).
Since joining the WTO in 2002, Taiwan has reduced its vehicle tariffs from 60 percent to 17.5 percent to meet WTO commitments. However, to protect the fragile domestic auto industry, it continues to maintain high import duties — 17.5 percent on vehicles, and between 8.1 and 15.8 percent on auto components. These rates are far higher than those of its major trading partners, including the US (2.5 percent) and Japan (zero).
Yulon Motor Co president Hsu Kuo-hsing (許國興) has said that abrupt or sweeping changes to these policies could significantly impact the domestic auto sector, which includes 2,500 manufacturers and supports about 300,000 workers and their families.
Lowering or removing the tariff to match the US’ 2.5 percent would erode the price competitiveness of locally produced vehicles, he said.
Another automaker said that vehicles and auto components make up less than 2 percent of Taiwan’s total exports to the US, so drastically cutting vehicle duties would do little to meet the US’ primary goal of reducing its trade deficit.
A more balanced and effective approach would be to cut the commodity tax, with current levies of up to 30 percent. Such a move would lower the cost of car ownership across the board, regardless of whether a vehicle is imported or domestically manufactured. This would offer fair benefits to foreign and local automakers alike.
The government could also consider easing import quotas on foreign vehicles. At present, Taiwan allows only 75 units of each US car model to be imported, a restriction that significantly limits market access.
The Ministry of Economic Affairs is reportedly considering reducing import duties on auto components and proposing a 50 percent cut in the commodity tax on vehicles. It is also proposing to phase out tariffs on imported vehicles entirely in 10 to 15 years, as support for a zero-tariff policy is gaining traction among different trade groups.
While these proposals appear sensible, they would result in a significant decline in tax revenue, an issue that requires approval from the Ministry of Finance. The ministry might not find the idea amenable, as it collected more than NT$130 billion last year from vehicle-related import duties and commodity taxes.
To strengthen Taiwan’s hand in negotiating lower “reciprocal” tariffs and alleviate the heavy tax burden on domestic car buyers, concerned government agencies should collaborate to reform the existing tax structure to better reflect the evolution of Taiwan’s industries.
The White House’s decision to take a 9.9 percent stake in Intel Corp is looking like very shrewd business indeed. Since the government bought in at US$20.47 a share last August, the US chipmaker’s surging stock price has delivered the US a US$43 billion return. One of the reasons the investment has so far proved so sound is that the White House has made sure of it. According to The Wall Street Journal, Howard personally pushed deals on Intel’s behalf with some of the most lucrative clients imaginable. They include Nvidia Corp, the company at the heart of the AI
A single photograph can cut through a lot of noise, but it can also be used to misrepresent the truth. At the very least, it can concentrate the mind on something that requires further investigation. On Monday last week, Ma Ying-jeou Foundation CEO Tai Hsia-ling (戴遐齡) and former National Security Council secretary-general King Pu-tsung (金溥聰) held a news conference in which they showed a photograph of former foundation CEO Hsiao Hsu-tsen (蕭旭岑), now Chinese Nationalist Party (KMT) deputy chairman. In the image Hsiao is seated next to Xiamen Taiwan Businessmen Association chairman Han Ying-huan (韓螢煥). The two men were holding
I first met Professor Ray Jiing (井迎瑞) as a film and documentary student at Shih Hsin University’s (SHU) Department of Radio Television and Film in 1988. The following year, he went on to become the director of the Chinese Taipei Film Archive — forerunner of the Taiwan Film and Audiovisual Institute (TFAI). Over his eight-year tenure, Jiing rescued and restored over 200 classic Taiwanese films. In 1997, he established the Graduate Institute of Studies in Documentary and Film Archiving at Tainan National University of the Arts (TNNUA), and I joined the program in his third cohort of students. Beyond a
A recent report concerning a student who is suing his teacher posed the question in its headline: Does failing a student in two subjects constitute bullying? The college student in Chiayi County apparently sought NT$2 million (US$63,603) in state compensation, but a court dismissed the case. The first reaction of many might have been to ask: What has happened to students nowadays? Some say that teachers have lost their authority, while others say students are overindulged. Some even start reminiscing over the days when “whatever the teacher says goes.” However, the real issue might be overlooked if emotional reactions like that are the
RSS