Tobacco.org

Health tax on cigarettes may rise subject to 5%  

The health surcharge of NT$20 imposed on every pack of cigarettes sold will be subject to a 5 percent business tax (or value-added tax), according to revisions to the Business Tax Law that passed the first reading by the finance committee of the Legislative Yuan yesterday.

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.

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