Reactions are mixed over news that the government may scrap the commodity tax (
A Chinese-language newspaper reported yesterday that the Ministry of Economic Affairs is proposing along with the Council for Economic Planning and Development a plan to abolish the commodity tax.
The ministry and council hope doing away with the tax will help revitalize battered traditional industries and increase job opportunities, the paper said, without citing sources.
The goals would be achieved by also providing five-year tax breaks for new investment in traditional manufacturing and related technical services, the government hopes.
The abolition of the commodity tax was among the major recommendations made by participants at the Economic Development Advisory Conference (
The elimination of the tax would lower production costs, benefitting companies in the automobile, natural gas, gasoleum, steel, glass, cement and home appliances industries.
"The proposed tax cut [should it be carried out] will help boost domestic investment, which in turn will generate more tax revenue," said TSU Legislator Huang Chung-yuan (
By levying no commodity tax, Huang said he believes many traditional industries would be willing to increase the amount they invest in Taiwan instead of moving overseas.
But others such as Chi Schive (
"In order to make investment more possible, the commodity tax should be abolished," Schive said. "But in view of the country's current fiscal difficulties, whether the government can come out with a comprehensive plan to cover the revenue shortfall is more important."
To make up the revenue shortfall, Schive suggests the government impose the so-called "luxury tax" on some expensive items or a "sales tax" for everything except food.
The Ministry of Finance opposes the move to axe the commodity tax. The ministry instead plans to propose a conditional concession by replacing the current commodity tax on oil products and automobiles with the "environmental tax," the report said, without elaborating.
According to government statistics, oil products and automobiles generate nearly 90 percent of total commodity tax revenue each year.
In 2001, commodity tax revenue amounted to NT$133.8 billion, with NT$80.8 billion coming from oil products and NT$33.5 billion from the automobile sector.
"In the short term, the proposed tax removal may help benefit the domestic economy," said Hsu Sung-ken (
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