§ Mrs. EwingTo ask the President of the Board of Trade what is the current level of taxation being levied by Japan on(a) Scotch whisky and (b) scochi; and if he will make a statement on convergence of taxation. [1365]
§ Mrs. RocheAs the question asks about convergence of liquor tax rates in Japan, a clear reference to the recent dispute over Japan's discriminatory taxation of foreign spirits compared with Japanese shochu, this answer assumes that the reference to "scochi" is a mistranscription of "shochu".
The current level of taxation levied by Japan on Scotch whisky of 40° of alcohol is 982,300 Yen per kilolitre (¥/KL) and on shochu of 25° of alcohol is 155,700 ¥/KL. However, as a result of negotiations between the EU and Japan to end discriminatory taxation of foreign spirits, the taxation on Scotch whisky will fall by 44 per cent. on 1 October 1997 to 551,000 ¥/KL and fall again on 1 October 1998 to 409,000 ¥/KL. Taxation on shochu will rise on 1 October 1997 to 201,900 ¥/KL and rise again on 1 October 1998 to 248,100 ¥/KL. A further transition period is granted for one type of shochu (shochu B). This will mean that once these changes are fully implemented the tax differential on a tax rate per kilolitre per degree of alcohol basis will be reduced from around 600 per cent. to just 3 per cent. for Scotch whisky, whilst taxation rates for shochu and white spirits will be equalised. The Scotch Whisky Association estimate that this will be worth some £75 million every year.
Furthermore, the WTO ruling obtained in reaching this settlement provides a useful precedent for tackling discriminatory taxation in other countries. As a result, the EU is already undertaking WTO consultations with the South Korean Government and have proposed initiating WTO consultations with Chile.