TAIPEI The Taiwanese government is communicating with the United States and the European Union to alleviate concerns that a government move to revise the law to reduce the tax rate on rice wine could lead to undercutting of the spirits market by rice wine, a Ministry of Finance official said Monday.
The Executive Yuan passed a draft amendment to the Tobacco and Alcohol Tax Law last month, planning to adjust the tax on rice wine by moving it from the distilled spirit category to the cooking wine category.
Under the draft amendment, the tax on a 0.6-liter bottle of rice wine will be reduced from NT$29.25 (US$0.93) to NT$5.4 and the price of a bottle of rice wine will be cut to NT$25 from NT$50.
The price adjustment has sparked questions in the U.S. and the E.U. as to whether it violates the regulations of the World Trade Organization (WTO), of which Taiwan is a member.
The E.U. has threatened to take legal action with the WTO against the move, according to local media reports.
The government has completed public opinion surveys that prove conclusively that 96.4 percent of the population in Taiwan use rice wine solely for cooking rather than drinking to convince the U.S., the E.U. and WTO members that lowering rice wine prices will not have an impact on other types of alcohol, according to the official.
But with the U.S. and the E.U. -- the main producers of brandy and whisky -- still speculating that once the price of rice wine is lowered, it will replace whisky, brandy and other varieties of alcohol, the government plans to carry out another survey to prove that the speculation is groundless, the official added.
Rice wine is different from distilled spirits such as brandy and whisky, the official went on, adding that the public will not drink the kitchen staple instead of other types of alcohol just because the price is cut and that the government will provide figures to allow other countries to gain an understanding of the alcohol market situation in Taiwan.
Meanwhile, Vice Premier Sean Chen said Monday that the government will do its utmost to make WTO members understand that rice wine in Taiwan is used for cooking, not drinking, including inviting them to taste rice wine chicken soup -- a traditional Taiwanese winter warmer.
On the fact that Japan and South Korea lost WTO dispute settlement cases over reducing the tax rates on Japanese sake and Korean soju, Chen said that the conditions are totally different, pointing out that rice wine is a cooking ingredient while sake and soju are for drinking.
Since Taiwan joined the WTO in 2002, rice wine tax reductions have been an issue of public concern in Taiwan.
In 1998, when negotiations were under way on Taiwan's entry into the WTO, the Taiwanese delegation was unable to get the U.S. and Europe to agree to classify rice wine as cooking wine, which would have made it subject to a lower tax rate, according to the official.
(C) 2010 Asia Pulse Pte Ltd.
The Executive Yuan passed a draft amendment to the Tobacco and Alcohol Tax Law last month, planning to adjust the tax on rice wine by moving it from the distilled spirit category to the cooking wine category.
Under the draft amendment, the tax on a 0.6-liter bottle of rice wine will be reduced from NT$29.25 (US$0.93) to NT$5.4 and the price of a bottle of rice wine will be cut to NT$25 from NT$50.
The price adjustment has sparked questions in the U.S. and the E.U. as to whether it violates the regulations of the World Trade Organization (WTO), of which Taiwan is a member.
The E.U. has threatened to take legal action with the WTO against the move, according to local media reports.
The government has completed public opinion surveys that prove conclusively that 96.4 percent of the population in Taiwan use rice wine solely for cooking rather than drinking to convince the U.S., the E.U. and WTO members that lowering rice wine prices will not have an impact on other types of alcohol, according to the official.
But with the U.S. and the E.U. -- the main producers of brandy and whisky -- still speculating that once the price of rice wine is lowered, it will replace whisky, brandy and other varieties of alcohol, the government plans to carry out another survey to prove that the speculation is groundless, the official added.
Rice wine is different from distilled spirits such as brandy and whisky, the official went on, adding that the public will not drink the kitchen staple instead of other types of alcohol just because the price is cut and that the government will provide figures to allow other countries to gain an understanding of the alcohol market situation in Taiwan.
Meanwhile, Vice Premier Sean Chen said Monday that the government will do its utmost to make WTO members understand that rice wine in Taiwan is used for cooking, not drinking, including inviting them to taste rice wine chicken soup -- a traditional Taiwanese winter warmer.
On the fact that Japan and South Korea lost WTO dispute settlement cases over reducing the tax rates on Japanese sake and Korean soju, Chen said that the conditions are totally different, pointing out that rice wine is a cooking ingredient while sake and soju are for drinking.
Since Taiwan joined the WTO in 2002, rice wine tax reductions have been an issue of public concern in Taiwan.
In 1998, when negotiations were under way on Taiwan's entry into the WTO, the Taiwanese delegation was unable to get the U.S. and Europe to agree to classify rice wine as cooking wine, which would have made it subject to a lower tax rate, according to the official.
(C) 2010 Asia Pulse Pte Ltd.
