Australia laments Thailand’s high wine tax as excise dept delivers bitter news

[webfact]

Australia laments Thailand’s high wine tax as excise dept delivers bitter news 

By Wichit Chaitrong
The Nation

 

Australia’s ambassador to Thailand Allan McKinnon

 

In potentially bad news for Thailand’s wine drinkers, tax rules are being tightened even as Australia complains of a high excise rate on wine.

 

 

Australia’s ambassador to Thailand Allan McKinnon said despite Covid-19, his country remains optimistic on trade and investment with Thailand thanks to agreements in place.

 

 

 

Although Australia is the world’s leading food exporter, Thailand enjoys a food trade surplus with Australia, he told the Nation Group during an exclusive interview.

 

Thai supermarket shelves remain packed with Australian products like wine, beef and lamb – attesting to Australia’s efforts to ensure sufficient freight flights during the pandemic to sustain its market share here, said McKinnon.

 

He also credited the Thai-Australian free trade agreement and the recently signed Regional Comprehensive Economic Partnership (RCEP) with boosting trade and investment between the two countries. Zero or low tariffs on Australian products had made many Aussie food products available on Thais’ doorsteps, he added.

 

However, McKinnon complained about Thailand’s high excise tax rate that sees a bottle of wine worth US$10 in Australia selling at three to four times that price here.

 

Australia’s total wine exports grew 4 per cent last year to over US$2.14 billion, but now face pressure from a brewing trade war with China. 

 

Thailand imposes excise tax on both domestic and foreign producers. But high excise tax singles out wine over other alcoholic drinks, said the ambassador.

 

The Thai Excise Department says it imposes zero excise on wine priced less than Bt1,000 per bottle – but Bt1,500 per litre of alcohol it contains. If the retail price is higher than Bt1,000, the rate rises from zero to 10 per cent.

 

Excise on beer is 22 per cent rate, plus Bt430 per litre of alcohol.

 

White liquor carries a tariff of just 2 per cent, plus a meagre Bt155 per litre of alcohol.

 

In a separate interview, Lavaron Sangsnit, director general of the Excise Department, told the Nation his department is reviewing tax collection on wine.

 

“We think we could collect more tax revenue on wine, but importers declare their prices much lower than they should, which results in lower tax collection,” he said.

 

Thailand currently collects about Bt1 billion in tax on wine per year, but the potential tax revenue is much higher, he said.

 

Lavaron said the department will create a database of wine prices so that their real market value could be checked if the price declared is unusually low.

 

Wine prices are complicated by the number of brands available (over 10,000) and the quality of grapes from one harvest to the next, he said.

 

“The department may take four to five months to build the price database, then look at appropriate tax rates later,” he said.

 

He also revealed the tax rate on white liquor is under debate.

 

In force since 2107, alcohol taxes are meant in part to protect health by increasing the rate according to alcohol content. However, high-alcohol white liquor is subject to a low tax rate.

 

Questioned about the liquor rate, Lavaron said his department will look at tax on wine first before moving on to other items.

 

Ambassador McKinnon expects trade and investment with Thailand to grow rapidly in years to come.

 

Australian government figures show its exports to Thailand were worth A$6.2 billion (Bt143.5 billion) against imports of A$14.6 billion in fiscal 2018-2019, resulting in a large trade deficit with Thailand.

 

However, Australia’s exports to Thailand rose 15.6 per cent year on year while imports from Thailand dropped 2.9 per cent.

 

Meanwhile Australia’s investment in Thailand totalled A$3.9 billion including foreign direct investment (FDI) worth A$1.4 billion. Thailand’s investment in Australia totalled A$6.9 billion including FDI worth A$5.8 billion. FDI does not include financial portfolios and real estate investments.

 

McKinnon expects the new US administration of President Joe Biden will be fully engaged in the Southeast Asia region.

 

The US is expected to take a strong role in Mekong development and also security and stability in the South China Sea, he said.

 

He also predicts the US government will restore the multilateral trade system under the World Trade Organisation (WTO) after Donald Trump’s administration blocked the appointment of judges on the WTO’s dispute settlement body.

 

On the brewing trade war with China, he said Canberra was open to talks but Beijing had not reciprocated, so Australia had taken the issues to the WTO.

 

Source: https://www.nationthailand.com/business/30401781

 

 

-- © Copyright The Nation Thailand 2021-01-26

 

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[RichardColeman]

45 minutes ago, webfact said:

But high excise tax singles out wine over other alcoholic drinks, said the ambassador.

So, chuck huge import taxes on Thai rice and wait for the response

[Somtamnication]

“We think we could collect more tax revenue on wine, but importers declare their prices much lower than they should, which results in lower tax collection,” 

 

Gee, wonder why?

[scubascuba3]

Examples of "white liquor"? 

[RJRS1301]

12 minutes ago, scubascuba3 said:

Examples of "white liquor"? 

white rum, vodka, gin I would imagine

[scubascuba3]

3 minutes ago, RJRS1301 said:

white rum, vodka, gin I would imagine

They sell a lot of "blended spirits" probably use colourings, I wonder if they are included as price is low

[ezzra]

Thailand set high bar when it comes to imported goods and merchandise from all over the world and Australia is not singled out here, i can go and list dozen of imported items that the price is quadruple once it's sold in Thailand...

[Salerno]

4 minutes ago, ezzra said:

Thailand set high bar when it comes to imported goods and merchandise from all over the world and Australia is not singled out here, i can go and list dozen of imported items that the price is quadruple once it's sold in Thailand...

 

True, but it's somewhat ignoring the two free trade agreements Australia and Thailand can take advantage of, the Thailand-Australia Free Trade Agreement and the ASEAN-Australia-New Zealand Free Trade Agreement ... shame they don't feel inclined to cut the wine excess given those agreements.

[Fex Bluse]

30 minutes ago, RJRS1301 said:

white rum, vodka, gin I would imagine

More like sake (Japanese) and baijou (Chinese) and soju (Korean) I think 

 

I would not be surprised if the Thais single out wine because it's mostly a westerner drink. 

Edited January 25, 2021 by Fex Bluse

[sammieuk1]

Tanks are expensive and wine drinkers will pay for it that and ASQ are the only revenue makers left????

[PatOngo]

Don't panic wino's, we have the cheap, healthy alternative!

 

[morrobay]

7 minutes ago, Fex Bluse said:

 

 

I would not be surprised if the Thais single out wine because it's mostly a westerner drink. 

Sure , it's a foreigners tax. It sure isn't to protect thai aldehyde ,I mean thai wine.

[PatOngo]

6 minutes ago, morrobay said:

Sure , it's a foreigners tax.

(White) Skin tax!

[morrobay]

4 minutes ago, PatOngo said:

(White) Skin tax!

Something like that

[Odysseus123]

11 minutes ago, PatOngo said:

Don't panic wino's, we have the cheap, healthy alternative!

 

To be used for medicinal purposes only.Drink only as directed by the proprietor of your local Mom 'n'Pop store...

[VocalNeal]

They should just send grape juice here and Thais can add there own alcohol. They do it already for locally produced "wine" 

[teacherclaire]

31 minutes ago, PatOngo said:

Don't panic wino's, we have the cheap, healthy alternative!

 

The White Poison with a 100 % Death Rate. Comparing that to wine is Blasphemy!!

[Paul Henry]

Thai logic to the fore again. If more tax revenue is the objective a few government officials and polies need to go back to economics school. Halve the tax triple the revenue. Simple maths but as mentioned before when sales are down raise the price. I was once told by a govt person high tax on wine was to protect the Thai wine industry? I assume he was referring to the fruit juice they sell as wine.

[Chassa]

1 hour ago, Fex Bluse said:

I would not be surprised if the Thais single out wine because it's mostly a westerner drink. 

Most Thai ladies drink Aussie red wine at my local bar (not Spy) but they're all married to farang (who pay). 

[madmitch]

5 hours ago, webfact said:

The Thai Excise Department says it imposes zero excise on wine priced less than Bt1,000 per bottle – but Bt1,500 per litre of alcohol it contains. If the retail price is higher than Bt1,000, the rate rises from zero to 10 per cent.

 

......................

 

“We think we could collect more tax revenue on wine, but importers declare their prices much lower than they should, which results in lower tax collection,” he said.

 

The second paragraph doesn't make a great deal of sense as it appears that almost all of the taxation is based on abv. The 10% on more expensive wines won't, in reality, add up to much.

 

One day they'll realise they could collect more tax if they reduced the abv taxation to something more realistic.

[Enzian]

The high wine tax targets foreigners, but also the hi-so locals (because they have money), who you think would have some clout with the government, but apparently not. There is also a crowd high in the government which is very anti-alcohol all around, and considering working class drinking habits (and Buddhism), it's hard to blame them. Someone should do a study of the anti-alcohol lobby, because they are interesting in the broad cultural picture, not because they are wrong.

I buy only Australian wine now that China upped the level of bullying.

[Suua]

23 minutes ago, Enzian said:

I buy only Australian wine now that China upped the level of bullying.

Well done sir......that's exactly the same reason I now buy Australian wine....and will continue to do so.

If only others would step up, and up the anti on 'anything but chyna'

[Misterwhisper]

5 hours ago, webfact said:

In force since 2107 2017, alcohol taxes are meant in part to protect health by increasing the rate according to alcohol content. However, high-alcohol white liquor is subject to a low tax rate.

Because it's "healthier" for the local producers of that ubiquitous gut rot known as "lao khao", perhaps?

 

Most alcoholics here (and there are tremendous numbers) are on that "lao khao" stuff.  So for the government to claim alcohol taxes were meant "to protect health" is nothing short of ridiculous.  

 

[Brock]

If the excise on wine was reduced, then wine would be cheaper so more wine would be bought. More sold wine equals more excise revenue.. Simple maths..

 

[khunjeff]

3 hours ago, scubascuba3 said:

Examples of "white liquor"? 

 

It's a literal translation of "lao khao", the cheap, pungent spirit made from sticky rice, bottles of which are shown in the photo posted by @PatOngo. Despite the perpetual claims that excise taxes are in place to combat alcohol abuse, the very lowest rates are paradoxically reserved for lao khao - which makes up the great bulk of alcohol by volume consumed in Thailand, especially by the heaviest drinkers - and the highest for wine, which is statistically insignificant here as a source of alcohol. 

[Captain_Bob]

Same as good quality imported cheeses and other "goodies", wine is taxed at a high rate because it is aimed at foreigners ("farang") who actually want/love/appreciate the stuff, and of course a few "hi-so" Thais who pretend to like it so as to impress their friends. The overwhelming majority of Thais don't have a palate (i.e. don't have a clue) for good wine, so hell yeah let's just impose a huge "farang tax" and jack it up every few years... cos we can. 

[overherebc]

3 hours ago, PatOngo said:

Don't panic wino's, we have the cheap, healthy alternative!

 

I always thought that was hurricane lamps and those garden light things.

[robblok]

Australia should not complain but take action. Just tax some Thai stuff. I mean they negotiated a trade agreement and after its done they moan.

 

So sound like me that the Australians did not negotiate well. I mean when you agree on a trade deal you make your demands. Its a bit stupid to do so after the deal is closed.

[hotchilli]

6 hours ago, webfact said:

However, McKinnon complained about Thailand’s high excise tax rate that sees a bottle of wine worth US$10 in Australia selling at three to four times that price here.

Do the same to Thai products entering Australia.. see how they react.

[Srikcir]

4 hours ago, Somtamnication said:

“We think we could collect more tax revenue on wine, but importers declare their prices much lower than they should, which results in lower tax collection,” 

 

Gee, wonder why?

Those importers are likely Thai companies but Thailand punishes Australia for perceived false low import value?

 

Why not focus on enforcing the law against the importers and avoid international disputes. As with The Philippines in the case of imported cigarettes, Australia might be right to (under WTO and/or free trade rules of engagement?) to retaliate against Thailand's alleged unreasonable higher wine import duty tax. How does that promote trade with Thailand?