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Subsidies for tobacco factory are illegal: foundation

By Abraham Gerber / Staff reporter

Construction of a new tobacco factory in Tainan should be halted, civic groups said yesterday, accusing the central government of approving illegal subsidies.

Activists from the anti-smoking John Tung Foundation gathered outside the Executive Yuan to call for a comprehensive ban on the construction of new factories by international tobacco firms, demanding that the central government withdraw approval of the Japan Tobacco Inc factory under construction in Tainan.

“From the central government’s hasty approval to the local government’s ‘joyful’ cooperation, the Tainan factory is an extremely obvious example of inappropriate and illegal executive measures,” Soochow University law professor and foundation chief executive officer Yau Sea-wain (姚思遠) said.

“The Statute for Investment by Foreign Nationals (外國人投資條例) clearly states that international firms are forbidden from investing in industries harmful to citizens’ health. Despite this, the Executive Yuan has chosen to label tobacco factories as ‘restricted,’ meaning they can still be built after passing review,” he said.

Yau added that the benefits enjoyed by Japan Tobacco Inc as a “foreign investor” are in violation of the spirit of the WHO Framework Convention on Tobacco Control, which Taiwan has ratified.

The convention’s guidelines forbid governments from providing any benefits or other support to tobacco firms.

The foundation’s tobacco control division director Lin Ching-li (林清麗) said that as a foreign investor, Japan Tobacco would be entitled to exemptions from land, house and business taxes for two to five years.

By selling cigarettes produced domestically, the firm would also be able to avoid an estimated NT$2.8 billion (US$86.5 million) in customs duties annually, she said, estimating the firm would be able to cut prices for a pack of cigarettes by at least NT$5.

She said that the foundation organized yesterday’s protest due to rumors the government was in the process of approving another factory.

The opaque approval process for foreign investment prevented the group from confirming the rumors, she said, adding that the foundation only became aware of the Tainan factory plans after they were already approved.

Japan Tobacco commands a 30 percent share of the national cigarette market, second only to state-owned Taiwan Tobacco and Liquor Corp.

The Tainan factory is to be the second built in the nation by a foreign firm, following the construction of an Imperial Tobacco factory in Miaoli County in 2009.

Activists also called for the government to divest itself from Taiwan Tobacco and Liquor to ensure it objectively enforces tobacco regulations.

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