Illicit cigarette use has doubled, major tobacco company study finds

By The Nation

 

 

Illicit cigarette use in Thailand has more than doubled, costing the country at least Bt3.6 billion a year in lost tax revenue, a study by the major tobacco company says.

 

Philip Morris (Thailand) Limited [PMTL] revealed the findings of its study on Monday, which compared Q4 of last year with the same period in 2016.

 

The study, conducted by research house Nielsen, showed that non-domestic cigarettes, or cigarettes without a Thai tax stamp, rose to 6.6 per cent in Q4 last year, an increase from 2.9 per cent in Q4 of 2016.

 

The study found the problem is most widespread in the south, with the provincial incidence as high as 76.6 per cent in Satun, 67 per cent in Songkhla, and 40 per cent in Patthalung, said Pongsathorn Ansusinha, PMTL's director of corporate affairs.

 

From the 10,000 samples of discarded cigarette packs collected for the study, 669 packs (or 6.6 per cent) were found without Thailand’s tax stamp and were thus considered “non-domestic” cigarettes.

 

Two cigarette brands made up about half of these non-domestic samples, neither of which was registered with the Excise Department.

 

Pongsathorn said that after the excise tax reform in September 2017, the company anticipated legal cigarette consumption volume to undergo a significant reduction this year because some smokers can no longer afford to buy legal cigarettes. They would either quit smoking or turn to the roll-your-own tobacco or illicit cigarettes.

 

“By using the 6.6 per cent rate, we estimate the consumption of non-tax-paid cigarettes in Thailand could reach about 100 million packs.

 

This could mean a loss of excise revenue of at least Bt3.6 billion per year, assuming excise tax of Bt36 per pack in 2018,” he said.

 

The amount could rise as the excise burden is set to rise again in October 2019, when all cigarettes would be subject to specific tax rate of Bt24 per pack plus 40 per cent ad valorem tax, he added.

 

Assuming the illicit cigarette use remained at 6.6 per cent, while the volume of legal cigarettes further contracts, the excise revenue loss could be as large as Bt5 billion per year in 2020, he said.

 

Pongsathorn urged the government to enforce laws, particularly the suppression and prevention of illicit cigarettes.

 

Source: http://www.nationmultimedia.com/detail/national/30342340

 

-- © Copyright The Nation 2018-04-03

The thai tobacco monopoly will be no doubt celebrating this wonderful news with a lavish party paid for with increased excise proceeds and revenue from fines imposed on those miscreants who had the audacity to use e-cigarettes instead ?

11 hours ago, webfact said:

Illicit cigarette use has doubled, major tobacco company study finds

That's what happens when you claim to be adding 6% (10baht) tax increase over 4 years when in fact it turns out to be 100% (60baht+) increase  

Increase in smuggling across the border no doubt which is surprising considering just how heavily they're guarded.

when you can buy a sleeve of smokes for 150 baht (real ones not fake) in neighboring countries then what would you expect PMI?

Well, who would have thought that a massive tax hike on an addictive product in a country with corrupt law enforcement would lead to an increase in black market products in the market.

 

What a shocker.

5 minutes ago, JonnyF said:

Well, who would have thought that a massive tax hike on an addictive product in a country with corrupt law enforcement would lead to an increase in black market products in the market.

 

What a shocker.

exactly, it is also the effect of having uneducated/unqualified people in jobs making these stupid decisions, when the Junta took over - a pack of popular foreign branded cigs was 65baht a packet they are now over 130baht a pack 

 

stupid is what stupid does

18 minutes ago, smedly said:

That's what happens when you claim to be adding 6% (10baht) tax increase over 4 years when in fact it turns out to be 100% (60baht+) increase  

Agreed. Governments have these cash cows they think they can milk and milk, but then consumers get so fed up they will resort to illegal products on general principle let alone price. Nobody likes to feel they are having the pi$$ taken out of them.

1 minute ago, smedly said:

exactly, it is also the effect of having uneducated/unqualified people in jobs making these stupid decisions, when the Junta took over - a pack of popular foreign branded cigs was 65baht a packet they are now over 130baht a pack 

 

stupid is what stupid does

apparently now is over ten pounds in the UK for 20. that'd make it an expensive habit

6 minutes ago, Happy enough said:

apparently now is over ten pounds in the UK for 20. that'd make it an expensive habit

comparing to another country has absolutely nothing to do with Thailand or the price of anything here 

27 minutes ago, smedly said:

comparing to another country has absolutely nothing to do with Thailand or the price of anything here 

well it does. the whole cigarette market in the whole world and their reasons for taxation are all connected. but you don't get it right. that's ok

1 hour ago, monkfish said:

Increase in smuggling across the border no doubt which is surprising considering just how heavily they're guarded.

Are you suggesting that there is complicity by the protectors of the nation's borders?

I am shocked. Absolutely shocked.

 

12 minutes ago, Happy enough said:

well it does. the whole cigarette market in the whole world and their reasons for taxation are all connected. but you don't get it right. that's ok

The application of taxes in the UK was a gradual process spanning decades and was measured against inflation - wage rises - the general economy etc etc, the UK economy is nothing like Thailand

 

The application of tax on cigarettes over these last 4 years in Thailand bares absolutely no resemblance to what went on in the UK ...................none

 

Thailand singled out and more than doubled the price of certain brands of cigarettes over a space of two years and are now complaining of the aftermath 

 

There is nothing reasonable or sensible about what they did

 

They are also ignoring the fact that foreigners now bring their own brands to Thailand when coming on holiday or crossing a border

2019.

Plus 24 baht plus 40% very annoying tax.

So does that mean

if now 100 baht plus 24 baht plus 40 baht

or

100 plus 24 baht plus 40% of

124 baht?

Well duh....

Firstly there no government and secondly they have been robbing and extorting people on anything imported for a decade and more. We need a new government lol. Fake News 

3 hours ago, smedly said:

There is nothing reasonable or sensible about what they did

Seems like the case for most things.

And this is from the people who refuse to join the improvement of vaping but instead have managed to get the government to declare vaping illegal.

 

I wonder what they will do about the new developments, such as IQOS (for those that don't know, this is a device that a tobacco company is developing - does not burn tobacco at 600 degrees but instead heats specially prepared tobacco to 300 degrees so that only nicotine comes off, sparing the user all the drawbacks of chemicals and tar etc)?

 

I know of several separate issues where Thailand has fallen behind in the pharmacutical industry, not allowing certain kinds of products to be sold even though they have been passed by all developed countries.

A way to beat the high cost of smoking real tobacco and enjoying the reduction in stress that a good smoke brings is to switch to a pipe. Eight oz., about a month's supply, runs $35 in the states. (How much does a cigarette smoker spend in a month?) Before the tobacco frenzy that used to cost $10. I'm talking about a top blend from a pipe shop, not that stuff in cans and pouches. 8 oz. Is legal limit to bring in. Have anyone you know bring in that amt. Look up shop near your friend's place, see what they offer and he can pick it up or get it mailed to him. I get a cherry almond blended in Norway and sold in States. Some women compliment me on the aroma. And, since you don't inhale, the health effects are minimal. I'm 76, smoking a pipe 55 years, healthy heart and lungs and can swim a mile. Try it out! 

The legal minimum income is 300 Baht per day. if a pack of branded cigarettes cost 140 baht, then you do not need to be Einstein, to predict the growth in the black market beforehand. The government likes to increase taxes, but without thinking ahead. They are fiscal policy amateurs.

Hang on a minute - this is just Philip Morris bleating, not the government. They grumble about lost sales in Thailand because of tax rises and now, having found that people buy their products from neighbouring countries, suddenly become great supporters of the government and its tax regime.

 

 

 

 

Obviously the citizens don't wish to be under the yoke of a monopoly with a product that is the target of excessively high 'sin taxes.'  Push anything hard enough, and you'll eventually force it into the underground economy. So now the government will have a reason to throw even more people in jail for what should be non-crimes.

Edited April 3, 20188 yr by connda

I'd suppose the results are skewed because it is so much easier to buy black market cigarettes near the Malaysian border, seems lots of disrespect for the central  authority down there. I read in the news.

And this is from the people who refuse to join the improvement of vaping but instead have managed to get the government to declare vaping illegal.

 

I wonder what they will do about the new developments, such as IQOS (for those that don't know, this is a device that a tobacco company is developing - does not burn tobacco at 600 degrees but instead heats specially prepared tobacco to 300 degrees so that only nicotine comes off, sparing the user all the drawbacks of chemicals and tar etc)?

 

I know of several separate issues where Thailand has fallen behind in the pharmacutical industry, not allowing certain kinds of products to be sold even though they have been passed by all developed countries.

Import Iqos are 220 baht a pack and more expensive than regular cigarettes. But no more cough. [emoji3]

 

 

Sent from my SM-G950F using Thailand Forum - Thaivisa mobile app

 

 

 

Bt3.6 billion per year of uncorrupted tax now corrupted another junta triumph

Off topic posts and the replies have been removed. 

11 hours ago, webfact said:

From the 10,000 samples of discarded cigarette packs collected for the study, 669 packs (or 6.6 per cent) were found without Thailand’s tax stamp and were thus considered “non-domestic” cigarettes.

This is not a scientific survey.  I seriously doubt that they collected samples from all over the country but instead focused on the tourist areas where more duty-free cigarettes will be consumed.  I am really surprised that the percentage is so low since every smart smoker grabs a carton at the border before coming into the country.  

I am sure that there will soon be goon squads following smokers to see where they purchased their cigarettes.  Whenever any country passes taxes that are excessive a black market will appear.  Prohibition in the USA is the prime example.  Organized crime got a huge boost during that experiment in morality.

4 hours ago, mrfill said:

Hang on a minute - this is just Philip Morris bleating, not the government. They grumble about lost sales in Thailand because of tax rises and now, having found that people buy their products from neighbouring countries, suddenly become great supporters of the government and its tax regime.

 

 

 

 

It appears that out of 2 pages of comments, you are the only one who picked up that point.

 

In other news, product sales down, Thai-Danish milk complain, CP foods complain etc.

Thanks to stupid policies, today they loose tax as the stuff get's in  from abroad....day after tomorrow they will loose more revenue, once expats start to get fed up with all the visa issue hassles and will leave (with their money or pensions) and spend it in other more friendly and cheaper countries next door...

Corporate Master Phillip Morris Thailand, pushing the Junta's buttons.  I feel a crack down coming on, and the beatings will continue until Phillip Morris' morale, and profits, improve.