(June 26, 2009) On June 17, 2009, the Tax Reform Committee of Taiwan's Executive Yuan (Cabinet) approved a proposal to expand energy taxes to include environment taxes, with the changes to take effect in 2011. The Committee's three-in-one proposal calls for the assessment of an energy tax (on gasoline and other fuels), a pollution tax (on air, water, sea, soil, and groundwater pollutants), and a greenhouse gas tax.
From 2011-2020, the levies will be incrementally implemented. The first year is expected to yield NT21.5 billion (about US$654 million) in revenues; at the same time, other taxes, such as the stamp and entertainment tax, would be abolished, a projected loss of revenue amounting to NT25.8 billion. Oil and natural gas are reportedly the major targets of the energy and greenhouse gas taxes, which would mean price rises for gasoline and electricity.
Some of the tax rates proposed by the Committee are as follows (NT1 equals about US$0.03):
- Energy taxes
Gasoline tax: NT5.73 per liter in 2011, NT1.91 more per liter annually thereafter, rising to NT22.92 in 2020.
Nuclear energy tax: NT0.08 per kilowatt-hour in 2011, NT0.17 per kWh in 2012, rising to NT0.84 per kWh in 2020.
- Environment taxes
Greenhouse gas tax (on gasoline, diesel, kerosene, aviation fuel, LPG, fuel oil, coal, natural gas), based on amount of carbon dioxide and fluorocarbons emitted when burned.
Gasoline tax: NT0.45 per liter in 2011, NT0.45 more per liter annually thereafter, rising to NT4.48 per liter in 2020.
Pollutants tax: fuel surcharges and air pollution control fees will be eliminated to avoid pollutants being taxed twice.
While the proposal has the support of the Ministry of Finance, the Ministry cautioned that in seeking to reduce energy use and carbon emissions, the government should soften the impact on business by making sure that the taxation is moderate. (Energy Taxes to Take Effect in 2011, TAIWAN TODAY, June 18, 2009, available at http://taiwantoday.tw/ct.asp?xItem=53024&ctNode=453&mp=9 [citing to Economic Daily News].)
A separate, draft Energy Tax Statute, initiated before the abovementioned Cabinet proposal was made, has already gone through a first reading in the Legislative Yuan. It was introduced on May 12, 2006, with a view to instituting new energy taxes and rates on January 1, 2007. (Legislator Ting Shou-chung webpage, The Legislative Yuan of Republic of China website, http://www.ly.gov.tw/ly/01_introduce/0103_leg/leg_main/leg_bill/leg_bill
_02.jsp?ItemNO=01030500&ly1000_bill_id=1021&stage=6&lgno=00001 (last visited June 23, 2009).)
A recent schedule of the legislative bill's proposed initial tax rates would reportedly impose no tax on natural gas and coal and NT8.73 per liter on gasoline, NT5.49 on diesel, NT0.61 on aviation fuel, NT0.72 on solvent oil, NT4.25 on kerosene, NT0.11 on fuel oil, and NT0.69 per kilo on LPG. For gasoline, diesel, aviation fuel, and LPG, the rate would rise NT2 per year per each unit beginning in the second year of the plan and NT3 in the third year; for kerosene and fuel oil, beginning in the second year, an increase of NT2 per unit per year; for natural gas, an increase of NT1 per unit per year beginning in the second year; for coal, an increase of NT0.2 per unit per year beginning in the second year, and beginning in the eighth year no further annual increases. (Energy Taxes: Discussion in Sight in the Next Session [in Chinese], MONDEY.UDN.COM, June 23, 2009, available at http://udn.com/NEWS/FINANCE/FIN10/4977079.shtml.)
Legislators have expressed the hope that the inclusion of environmental taxes, as set forth in the Cabinet proposal, in a revised draft energy tax law will be discussed in the upcoming legislative session, so that the government and the legislative plans will be combined in the resulting legislation. (Id.)