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Cabinet approves proposed hikes in tobacco tax, surcharge

Cabinet approves proposed hikes in tobacco tax, surcharge

2013/05/09 18:25:09

Taipei, May 9 (CNA) The Cabinet on Thursday approved a draft bill to raise the tax and surcharge on tobacco products, which will increase cigarette prices by NT$25 (US$0.85) per packet once the bill is passed by lawmakers.

The draft amendment proposes raising the health surcharge on cigarettes from NT$20 to NT$40 per pack, and the tobacco tax from NT$11.8 to NT$16.8 per pack, according to a Cabinet statement.

The average cost of cigarettes in Taiwan is NT$70 per packet, including taxes and surcharge, according to the 2012 edition of Tobacco Atlas, which is published by the World Lung Foundation and the American Cancer Society.

The surcharge, implemented under the Tobacco Hazards Prevention Act, is used to fund cancer prevention and medical services in rural areas, among other things.

The Department of Health (DOH) said the NT$25 increase is expected to reduce the smoking rate in the country by 20.8 percent, which means cutting the number of smokers by 740,000. The rate of smoking in Taiwan among people 18 years old and over stood at 18.7 percent last year, according to government statistics.

The expected drop in the smoking population will generate long-term social benefits valued at an estimated NT$296 billion, said Chiou Shu-ti, director-general of the DOH’s Bureau of Health Promotion.

Citing a recent telephone poll, the bureau said 62.1 percent of the public supported an increase in the tobacco surcharge.

When the respondents were informed how the surcharge would be used, the support rate rose to 82.6 percent, the bureau said.

However, Deputy Health Minister Day Guey-ing said that even with the proposed hikes, Taiwan will not meet the World Bank’s recommendation that such taxes should account for 67-80 percent of the price of tobacco products.

To reach the minimum 67 percent level, the combined increases would have to total least NT$27.6 per packet of cigarettes, he added.

In addition, Lin Ching-li, chief of the John Tung Foundation’s tobacco prevention division, said the tax should be raised by at least NT$30 since it had not been increased in 26 years.

Lin also said she is worried that lobbyists will succeed in getting lawmakers to reject the NT$5 tobacco tax hike.

Meanwhile, Deputy Finance Minister Tseng Ming-chung said the government will work harder to crack down on tobacco smuggling, in light of the fact that such activities increased in 2006 and 2009 when the tobacco surcharge was raised.

(By Hsieh Chia-chen, Chen Ching-fang and Kay Liu)

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