Excise Dept sees no hoarding as tax hike looms

The Excise Department has found no significant stockpiles of alcohol or cigarettes meant to reap a quick profit ahead of a new law that will change excise tax calculations and rates starting on Sept 16.

The department has found only seasonal hoarding, director-general Somchai Poolsavasdi said yesterday.

The new excise duty rates for alcohol, cigarettes and playing cards go before the cabinet for approval on Tuesday to ward off stockpiling ahead of the effective date four days later.

The cabinet recently gave the nod to organic laws concerning the new excise tax rates, which will apply to all 21 products subject to excise duties except alcohol, cigarettes and playing cards.

Under the new excise law, a recommended retail price will replace the existing ex-factory price and cost, insurance and freight (CIF) values as a base for excise tax computation. The change is aimed at creating a fairer system for manufacturers and importers after some businesses were found to have exploited the value system to understate their tax bills.

The new law has stoked operators’ and consumers’ concerns that taxes will increase.

Mr Somchai said hoarding will not benefit operators, as the Excise Department has stuck to a tax neutrality concept for the change in tax-base computation to prevent a substantial tax burden increase on manufacturers and importers.

The new tax base will prevent excise officials exercising discretion on tax in order to create fairness for taxpayers and comply with international standards, he said, adding that the new law abides by World Trade Organization principles because the same standard will be applied to domestic and imported products.

Somdet Srisawat, deputy director-general of the Excise Department, said some sweetened soft drinks that are currently tax-exempt will lose their tax privilege when the new law comes into force.

For fizzy drinks, the Excise Department, under the new law, will impose a levy based on syrup concentrate that will be convenient because a large number of soda fountain machines are found across the country, Mr Somdet said.

He said duty-free tobacco planted in the country will also be subject to tax under the new law.

According to Mr Somdet, the new excise tax will not significantly increase prices on consumers.

For alcohol and cigarette distribution licence fees, the levies, under the new law, will be based on how large the distributor is, he said.

Nutthakorn Utensute, director of the Excise Department’s planning bureau, said fruit and vegetable juice will be subject to a one-baht excise tax per 1,000-milligramme bottle, as sugar typically accounts for 14-16 grammes of their 100-millilitre volume.

The sugary drinks tax will be levied at 20-30% of the suggested retail price, with the aim of compelling makers to reduce sugar content to improve public health, Mr Nutthakorn said.

The rates will be increased two years after enforcement to allow time for manufacturers to reduce sugar content, he said.