Gov’t mulls switch to pay-as-you-go fuel tax


By Enru Lin ,The China Post

The Ministry of Transportation and Communications (MOTC, 交通部) may switch from its one-time fuel tax to a pay-as-you-go model. Under Taiwan’s present system, a vehicle owner is charged an annual fuel tax based on engine displacement volume. Such a model is simple and inexpensive to administer, but not comprehensive, said MOTC Minister Mao Chi-kuo (毛治國) at a legislative interpellation session yesterday. The MOTC may switch to a model that’s “complex” but also more “precise” and “reasonable”: fuel tax levied directly at the gasoline pump. “The pay-as-you-go model is in line with my own thinking,” said Premier Sean Chen (陳冲) at the Legislative Yuan.

A, B Plans Mao said that the MOTC is considering two very different fuel charge models; pay-as-you-go is “Plan B.” “Plan A” incorporates the fuel tax into a projected Energy Tax (能源稅) by the Ministry of Finance (MOF, 財政部), he said. Pending legislative approval, the MOF’s Energy Tax applies to sources of energy such as gasoline, diesel oil, kerosene, aviation fuel oil, liquefied natural gas, fuel oil, and coal. “Under ideal circumstances, the fuel charge would be implemented in conjunction with the Energy Tax,” said Mao He added that the program eliminates the necessity for two programs when just one will do. But if the Energy Tax cannot be implemented in the near future, the MOTC is prepared with “Plan B,” Mao continued. “Plan B” taxes vehicle owners based on their actual fuel use. Taxes are levied at the gas station whenever a vehicle owner fills up his tank. The MOTC has already drawn up a preliminary list of relevant amendments and administrative support, said Mao.

Obstacles to Pay-as-you-go A handful of challenges stand in the way of the pay-as-you-go plan. Mao said the design must be able to differentiate between taxable fuel use and use that’s exempt. Fuel use by farming industries or fisheries is not subject to the tax, he said. Pay-as-you-go may need to develop new refund or subsidy programs for fuel use that is exempt from taxation. A second challenge is to counter illicit fuel operations. Eligible consumers may seek to purchase untaxed fuel and resell at a profit, said Administrative Deputy Minister Chen Jian-yu (陳建宇) of the MOTC. Another challenge is preventing a steep spike in bus and train fares. Public transportation vehicles are heavy fuel users and are set to face a tax increase under pay-as-you-go. The public would see the tax hike in the form of fare adjustments, he said.