# a 30 per cent reduction in the excise tax otherwise due

#### thtoan79

##### Senior Member
Hello dears,

I'm still reading a case. And as it stands, I have an obscure sentence that I need to ask for your helps :"in the following fiscal year, such producers are entitled to a 30 per cent reduction in the excise tax otherwise due on their first 200 kilolitres shipped from the factory"

I can't get what this sentence means because of the part "otherwise due on", I'm not very sure which part of the speech each of these words belong to and which meanings of theirs are being used in this sentence.

• #### Beryl from Northallerton

##### Senior Member
I think that this means a thirty percent reduction of the tax that would be payable if it were being levied at the full rate.

#### Thomas Tompion

##### Senior Member
Hello dears,

I'm still reading a case. And as it stands, I have an obscure sentence that I need to ask for your helps :"in the following fiscal year, such producers are entitled to a 30 per cent reduction in the excise tax otherwise due on their first 200 kilolitres shipped from the factory"

I can't get what this sentence means because of the part "otherwise due on", I'm not very sure which part of the speech each of these words belong to and which meanings of theirs are being used in this sentence.

Otherwise - adverb: the tax would, in other circumstances be due on the first 200 kilolitres.

Due - adjective meaning needing to be paid.

On - preposition: the tax would in other circumstances need to be paid on the first 200 kilolitres.

So it seems to be saying that the producers are entitled in the following year to a 30% reduction on the normal excise tax on the first 200 kilolitres that they ship.

Suppose that the normal excise tax is 1000 dong a kilolitre and that they always ship 1000 kilolitres.

In year 1 - the tax due would be 1000 x 1000 = 1,000,000 dong.

In year 2 - the tax due on the first 200 kilolitres would be 200 x 700 (70% of 1000) = 1400; the tax due on the remaining 800 kilolitres would be 800 x 1000 = 800,000.

So the the tax due on the total 1000 kilolitres would be 940,000 dong.

I'm not a tax expert, so get other opinions if this is important.

#### thtoan79

##### Senior Member
Thank you both, especially Thomas Tompion

#### thtoan79

##### Senior Member
I'm sorry but this sentence is still so vague, what do they use "otherwise" for?

#### Thomas Tompion

##### Senior Member
I'm sorry but this sentence is still so vague, what do they use "otherwise" for?
Otherwise indicates what would have happened in other circumstances (if the reduction in tax on the first 200 kilolitres had not been granted).

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#### thtoan79

##### Senior Member
Actually, I'm not very sure because this is not my wording, but in my opinion, kilo usually means one thousand of a unit of measure, in this case, it may be 1000 litre.

#### Thomas Tompion

##### Senior Member
Yes, I think you're right. A millilitre is a thousandth of a litre.

Are you clear about otherwise, now?

#### thtoan79

##### Senior Member
now I'm totally confused. What do you think would have happened if the reduction in tax on the first 200 kilolitres had not been granted?

#### Thomas Tompion

##### Senior Member
now I'm totally confused. What do you think would have happened if the reduction in tax on the first 200 kilolitres had not been granted?
Without the reduction the tax would have remained the same.

In the world of my example, you'd pay 1000,000 dong a year instead of 940,000 dong.

This would be because the tax on the first 200 kilolitres would not be reduced - these are the 'circumstances' which the 'otherwise' refers to.

Ask again, if it's still not clear.

#### thtoan79

##### Senior Member
Ok, this is the full context "The United States requested the Panel to declare that the reduction in excise taxes for small-volume producers, contained in the 1989 legislation, discriminates on its face against imported shochu, sake and wine and therefore violates Article III:2, first sentence. The operative provision of the 1989 legislation is phrased in terms of “shipment from the factory”, terms which, under the Liquor Tax Law, refer exclusively to factories in Japan. These measures apply to producers of such alcoholic beverages whose taxable shipments from the factory do not exceed 1300 kilolitres in a given fiscal year; in the following fiscal year, such producers are entitled to a 30 per cent reduction in the excise tax otherwise due on their first 200 kilolitre shipped from the factory. This provision, in the US view, was provided as compensation to small domestic producers for the 1988 law reducing the other protection afforded by the tax differential between these alcoholic beverages and competing imports"

So, what do you think? Because I believe that these small producers, no matter what the case is, would gain some benefits, without the reduction, what would have been their benefits?

#### Thomas Tompion

##### Senior Member
Hello Thtoan,

Isn't the point that Japan was switching (AB-1996-2) from ad valorem taxes to specific taxes on these drinks, and the imported drinks would face steeper excise duty than part (the first 200 kilolitres) of the output of small Japanese factories, who had been granted this reduction to ease the transition? The US seems to be saying that this amounted to discrimination against imports, hence this part of its case before the WTO (GATT became WTO in 1995).

If I remember correctly, Article III:2 states that the same drinks must bear the same excise duties.

It's possible that these small producers might gain benefits even without the reduction, particularly as the Japanese government declared certain sorts of shochu to carry a lower specific tax than other sorts of shochu - an importer of the other sort would face a higher tax than a Japanese producer of the sort carrying the lower tax.

But I don't think that is the meaning of 'otherwise' in the sentence you have been raising. The reduction in the tax otherwise due must surely mean the reduction in tax compared with what would have been due if the special tax rate on the first 200 kilolitres had not been granted. 'Otherwise' here means 'in the case that this reduction had not been granted'.

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#### Beryl from Northallerton

##### Senior Member
Remember to name your source, thtoan79.

#### thtoan79

##### Senior Member
I'm so sorry, the source is " Japan- Alcoholic Beverages - Panel Report"

#### Thomas Tompion

##### Senior Member
I'm so sorry, the source is " Japan- Alcoholic Beverages - Panel Report"
Are you clear about 'otherwise', yet, Thtoan, or still in the mists?

#### thtoan79

##### Senior Member
Can you rewrite the whole sentence by using 'in the case that this reduction had not been granted' instead of "otherwise". (I'm very grateful because of your kindness)

#### Thomas Tompion

##### Senior Member
Yes, that is what it means.

#### thtoan79

##### Senior Member
I mean "can you rewrite the whole sentence for me?" (because I don't know where to put 'in the case that this reduction had not been granted')

#### Thomas Tompion

##### Senior Member
"in the following fiscal year, such producers are entitled to a 30 per cent reduction in the excise tax otherwise due on their first 200 kilolitres shipped from the factory"
In the following fiscal year, such producers are entitled, on the first 200 kilolitres shipped from the factory, to a 30 per cent reduction in the excise tax which would have been due if this reduction had not been granted.

I hope this helps clarify the meaning.

ps. It's so obvious it scarcely needs saying. I think that's what may have puzzled you, Thtoan; you couldn't believe anyone could be writing something so vapid.

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#### thtoan79

##### Senior Member
oh, god, now I get it, so if "otherwise" is the case, the only thing that will happen here is the tax is due, not the whole sentence, right?

You should know that this is what I understood in the first place " otherwise, such producers, in the following fiscal year, are entitled to a 30 per cent reduction in the excise tax which is due on their first 200 kilolitres shipped from the factory"

#### Thomas Tompion

##### Senior Member
I think officials write in this way because they are obsessed with the idea that they must eliminate all possible ambiguity.

#### thtoan79

##### Senior Member
Thank you so much.

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