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Taiwan's Energy Tax Expected Late Next Year

by Mary Swire,, Hong Kong

19 December 2012

Taiwan’s Finance Minister Chang Sheng-ford has disclosed that further tax reforms, including the proposed energy tax, will be introduced when the country’s economy shows a stronger growth rate, expected to be towards the end of 2013 or beginning of 2014.

He forecast that, while tax reforms to cut carbon emissions and save energy remain one of the government’s main priorities, they should be introduced when the growth rate in Taiwan’s gross domestic product reaches 3.5% per quarter, which is expected to happen late next year.

The energy tax had been postponed this year because of the current global economic uncertainties, and, in Chang’s opinion, positive economic growth and falling fuel prices will be required before it can be contemplated that an energy tax would receive public support.

The government has insisted that the energy tax would be structured as a revenue-neutral measure, and that taxpayers would not pay more taxes as it would consolidate several energy-related taxes, such as the existing commodity tax, into one measure, and add a new small carbon tax on certain items.

As previously reported, that carbon tax element would be levied on gasoline, diesel oil, kerosene, aviation fuel oil, liquefied natural gas, fuel oil and coal. Initially, it would exclude the existing auto fuel charge, which could be incorporated into it subsequently.

However, Taiwan’s businesses have been consistent in their opposition to the new tax, largely based around their fears that an energy tax would erode their competitive position internationally, particularly as regards Japan and South Korea, if Taiwan became an economy with comparatively high energy costs.

In reply, the government has emphasized that, while their intention is not to raise revenue by introducing the new tax, with Taiwan relying on imports for over 99% of its energy and with a high average per capita energy consumption, it needs to encourage energy-efficiency. Nevertheless, any decision on the tax would take into account its impact on industrial costs.

TAGS: environment | Finance | tax | business | energy | Taiwan | environmental tax | oil and gas | ministry of finance | carbon tax | tax reform

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