Cabinet gives OK to revised alcohol, tobacco excise tax

The cabinet yesterday approved ministerial regulations to set the new excise tax rates for alcohol, cigarettes and playing cards.

The restructuring is scheduled to come into force on Sept 16.

Somchai Poolsavasdi, director-general of the Excise Department, said the new excise tax rates will be announced in the Royal Gazette on Friday and will take effect on Saturday.

Mr Somchai said the new excise tax aims at making state tax collection more transparent and fair, conforming to international standards as well as protecting public health.

“The purpose of the new excise Act is to restructure the excise tax on liquor and cigarettes, not to increase the government’s revenue,” he said.

According to a source from Government House, the new tax rates for liquor will be based on the degree of alcohol contained, meaning a higher degree will be subject to a higher tax.

Mr Somchai said the new excise tax rate on cigarettes will be based both on quantity and value.

New excise duties on cigarettes, liquor and playing cards are part of the new excise law, i n which suggested retail prices will replace the existing ex-factory price and cost, insurance and freight 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 understated their tax bills.

Deputy Finance Minister Wisudhi Srisuphan said the new tax rate on each type of alcoholic drink will take into account health and sanitation issues.

The current tax structure is based on sales prices rather than the degree of alcohol.

Regarding a recent warning by the Thai Health Promotion Foundation (ThaiHealth) that higher taxes to be levied on beer may force drinkers to turn to local white spirits, Mr Wisudhi said the ministry needs to wait for more details on the new rates for each product.

ThaiHealth chief executive Supreda Adulyanon said earlier this month that under the new tax ceiling, the retail prices of liquor and beer will be not much different, and this could lead to consumers making unhealthy choices.

For example, l ocal white spirits known as lao khao will be subject to a lower tax than beer, which may lead some drinkers to choose the much stronger lao khao, Mr Supreda said.

But Mr Wisudhi said he believed the new tax rates would not lead to significant changes of retail prices for alcoholic drinks.

In a separate development, the cabinet yesterday approved a draft bill on public debt management and treasury bills.

Kobsak Phutrakul, assistant minister to the Prime Minister’s Office, said the draft bill on public debt management will give the Finance Ministry authority to borrow up to 5% of each fiscal budget, or about 140 billion baht, by issuing treasury bills and short-term bonds.

Mr Kobsak said the draft bill on treasury reserves will let the government better manage treasury reserves and allow a higher budget to finance state measures.

He said the two bills will help the Finance Ministry handle treasury reserves more efficiently, as well as provide more liquidity to the government.