Massive tax rise planned

| March 14, 2017

tax photoLegislators in Taiwan on Monday gave preliminary approval to a bill that would increase the tax on a pack of cigarettes by about 170 percent, according to a story in The China Post, Taipei.

If the law is passed, the tax would increase from the NT$590 per 1,000 cigarettes to NT$1,590 per 1,000; or from NT$11.80 a pack to NT$31.80 a pack.

The new rates could take effect as early as June.

Raising cigarette tax was part of a set of policies announced earlier this year aimed at generating more funds for the government’s long-term care program.

The Finance Ministry said that it expected income from its tobacco tax and surcharge to exceed NT$23.3 billion next year.

The Finance Minister Sheu Yu-jer said Taiwan’s smoking incidence among people with a monthly income of between NT$20,000 and NT$40,000 was more than 20 percent, while the incidence for those earning more than NT$100,000 a month was 34 percent.

“The cigarette hike will impact people with middle and high income the most,” said Kuomintang (KMT) lawmaker Luo Ming-tsai in opposing the measure.

Luo added that only 10.9 percent of low-income people smoked.

According to data released by the Ministry of Health and Welfare, the overall smoking incidence for 2015 was 17.1 percent.

The aim is to lower that to 15.3 percent this year, and to 14.0 percent in 2025.

The New Power Party (NPP) legislator Huang Kuo-chang argued that the cigarette tax hike would not be a stable source of funding for the long-term care program, calling the policy “unpractical”.

“If smoking rates fall year by year as planned by health officials, the drop will absolutely affect long-term care tax revenue,” said Huang. “While at the same time, both demand and required funding for long-term care is set to increase.”

Responding to Huang’s criticism, Sheu said the declining smoking rates had been taken into account when designing the funding structure.

Since it was “impossible for addicts to stop smoking in an instant”, he added, the smoking population would not drop immediately.

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