<strong>China: Taiwan Proposed Hike in Tobacco Surcharge Draws Opposition</strong>

Source from:  Focus Taiwan  03/07/2013

The Confederation of Trade Unions of the Taiwan Tobacco and Liquor Co. condemned Wednesday a proposal to double the tobacco surcharge, saying that it is not an ATM from which the government can draw as much cash as it wants.

Citing government statistics, the organization said the average retail price for a pack of cigarettes currently stands at NT$70 (US$2.36), NT$31.8 of which is tax and surcharge.

The tax and surcharge account for 45.5 percent of the retail price, a spokesman for the confederation said, noting that if import tariff is included, the ratio of the combined tax, tariff and surcharge rises to 54 percent.

It is close to the "medium-high level" of 55 percent in Australia, 58 percent in Japan and 40 percent in the United States, the spokesman said. "There is no room for a hike."

The confederation also said the tobacco tax and surcharge generates income of around NT$55 billion for the state coffers each year, while health insurance expenditure on medical care and treatment of smoking-incurred diseases reaches NT$30 billion a year, it said, citing research by the Taipei-based John Tung Foundation, an anti-smoking advocate.

The tax and surcharge on one single product is already so high that it surpasses the actual need for a tobacco health and welfare surcharge, the confederation said.

While 70 percent of the tobacco surcharge revenues are used to cover expenditures under the national health insurance system, it went on, the proposed hike seems to treat the surchange as a bottomless purse for the system's expensive operations.

At a presentation on the overall health of the Taiwanese people a day earlier, Chiu Shu-ti, head of the Bureau of Health Promotion (BHP), revealed a proposal by the Cabinet-level Department of Health to raise the tobacco surcharge from the current NT$20 per pack to NT$40.

Chiu said Taiwan's tobacco prices are cheap compared with neighboring countries such as Malaysia and Thailand.

Taking the purchasing power factor into account -- the amount of goods or services that can be purchased with a unit of currency -- the average price of cigarettes is US$4.18 per pack in Taiwan, US$4.35 in China, US$6.12 in Malaysia and US$5.45 in Thailand, according to BHP data.

By raising the tobacco surcharge, more and more people would quit smoking, Chiu said, expressing hope the smoking rate among people aged over 18 in Taiwan could be halved from the current level within 10 years.

BHP statistics indicated the smoking rate of people aged above 18 in Taiwan declined to 18.7 percent last year from 21.9 percent in 2008. Some 470,000 smokers quit smoking in the four-year period, the bureau said.

According to the Tobacco Hazards Prevention Act, a health surcharge of NT$1,000 should be imposed on every 1,000 cigarettes and the competent authories must review the amount of the surcharge every two years.

The surcharge was advocated by civic groups in 2000 and a surcharge of NT$5 per pack was first imposed in 2002. It went up to NT$10 in 2006 and doubled again to its current rate of NT$20 in 2009.

Any proposed surcharge adjustment must be subject to Cabinet review and approval before it can take effect. It does not require an amendment to the act.