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USTR expresses concern over Taiwan rice wine tax cut

2010/08/20 10:38:26

Washington, Aug. 19 (CNA) The U.S. government expressed concernThursday over the Taiwan legislature's approval earlier in the day ofa tax reduction for rice wine -- a kitchen staple among Taiwaneseconsumers.

"The United States is concerned with the potential market impactof Taiwan's tax reduction on rice wine, " said an official with theOffice of the United States Trade Representative (USTR) in responseto a query from CNA.

The USTR has already conveyed its concerns about Taiwan's tax cutdirectly to the Taiwanese authorities, the official said.

The United States expects all WTO members to abide by their WTOobligations. It would be inappropriate to comment on whether this, orany other specific issue, might be subject to WTO litigation, theUSTR said.

Taiwan's Legislative Yuan approved a reduction in the tax on ricewine from NT$29.5 (US$0.93) per 600 c.c bottle to NT$5.4 Thursday.The move is expected to bring the price of local rice wine fromNT$50 per bottle to NT$25.

The Ministry of Finance said that although the cut is expected toincrease the sale of the wine from 7.5 million bottles per year to210 million -- the amount before the NT$29.5 tax was imposed -- it isset to cost the government NT$1.47 billion in tax revenue.

In fact, there is a WTO tax bracket for alcoholic beverages forkitchen use -- which is what over 90 percent of Taiwan's rice wine ismade and sold for. However, rice wine has been taxed as a distilledspirit, and other WTO members -- principally the U.S. and theEuropean Union -- are under the impression that reducing the tax onthe cooking wine will undercut their sales in Taiwan of spirits suchas whisky and brandy, neither of which are used for cooking inChinese cuisine.

(By Zep Hu and Deborah Kuo)