Health tax on cigarettes may rise subject to 5%

Based on the revisions, if one pack of cigarette sells for NT$50, including the NT$20 health surcharge, then the five percent business tax will be imposed on the base of NT$50, instead of the existing NT$30.

At the moment, the annual health surcharge income from sales of cigarettes amounts to around NT$30 billion, and the 5% business tax on the surcharge, if put into practice, will bring the state an additional annual income of NT$1 billion.

After the 5% percent business tax is imposed on cigarettes, consumers will inevitably pay more to buy cigarettes. Whether this will undermine their willingness to buy tobacco products remains to be seen.

The revisions also stipulate that the five percent business tax should be incorporated into the pricing structure for commodity products and services. Violators will be fined NT$1,500 to NT$15,000. In other words, the price tag for any commodity or service should include the five percent business tax.

Dealers of higher-price commodities or 3C products have usually told consumers if they don't demand invoices, the five percent won't be calculated into the sales prices, thus evading business tax payment. Such a practice will be fined after the newly revised Business Tax Law is ratified by the Legislative Yuan.

Meanwhile, the business income tax applicable to foreign securities firms will be slashed to 3 percent from the existing 5 percent, rather than 2 percent as proposed by the Ministry of Finance. This is because the business tax income contributed by domestic securities firms and other financial institutions will be funneled into the Resolution Trust Company fund designed to relieve financially-troubled institutions, while the income contributed by foreign securities firms will be directly funneled into national coffers.

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