New Alcohol Content Tax Proposed

[george]

New alcohol content tax proposed

'Excise should reflect alcohol content'

BANGKOK: -- Academics yesterday proposed the government adopt a new excise structure for alcoholic beverages that was based on alcohol content, for the sake of social welfare.

Bunchon Songsamphant, a tax specialist at the Finance Ministry, and Pongsak Hoontrakul of Chulalongkorn University's Sasin Graduate Institute of Business Administration said the best solution would be to amend the law to levy taxes specifically based on alcohol content.

However, such a move would be difficult, because any amendment would require parliamentary approval, so they suggested the government instead use a "synthetic volume-based rate" proportional to alcohol content.

This type of measure requires only a directive from the Finance Ministry. In addition to social-welfare benefits, they said the proposed change would lead to an additional Bt30 billion in tax revenue annually.

Speaking at a seminar entitled "Alcohol, No Ordinary Commodity: Its Tax Implications for Thailand" at Chulalongkorn University, they suggested there be a single reference price for beer and different types of liquor proportional to their alcohol content for tax-collection purposes.

At present, there are three reference prices - for economy, standard and premium beers - resulting in a distortion in tax collection.

For instance, economy beer brands, which have the biggest market share, pay the least in taxes even though they have the highest alcohol content.

As a result, consumption of beer and other liquor with high alcohol content has increased rapidly in recent years, with rising social costs.

The government should also modernise its administrative system and digitise the process to track, acquit and audit foregone taxes and leakage in an effective and timely manner.

The alcoholic-beverage industry is big business, generating high revenue and creating many jobs, but its products also lead to high social costs in terms of public health and safety, as well as the environment.

The government collects some Bt90 billion in taxes on alcoholic beverages.

The outdated tax structure has meant Thais are lured to consume beverages with high alcohol content and cheap prices, the academics said, adding that it also distorted the market and led to unfair competition among alcohol firms.

In other words, the more the government raises the alcohol tax rate under the present structure, the more cheap alcohol is consumed, they said.

Thailand Development Research Institute president Nipon Poapongsakorn said the government should also use the excise tax system to reduce alcohol consumption and address social damage caused by such consumption.

He said the present excise structure caused many problems. The Excise Department is not able to collect taxes as targeted, because consumers turned to cheap and smuggled beverages instead.

Boonchuay Tongcharoenpulporn, director of the Thammasat Foundation and former secretary-general of the Federation on Alcohol Control of Thailand, said the Asean Free-Trade Area would also lead to more cheap imports from lower-cost countries like Laos and China.

"Many consumers have not been educated to drink responsibly, in accordance with |the law and regulations," he said, adding that many drinkers did not know how much |they could consume and still avoid |health and social problems, due to a |lack of alcohol-testing devices for individual use.

-- The Nation 2009-08-26

[Thai at Heart]

I can see the CEO's of ThaiBev and Diageo Thailand will have to go the ATM again.

[Ricardo]

Might the tax on imported wines finally be reduced, under this reform, to be lower than on locally-made spirits ?

[Samuian]

Might the tax on imported wines finally be reduced, under this reform, to be lower than on locally-made spirits ?

Wish full thinking...?!

It is probably nothing else then a complaint by lobbyists of premium beer producers/importers/sellers,

of "unfair taxes" towards local cheap beer producers with "high" alcohol content.

Chang has, in a very short time frame, grabbed a large chunk of the beer market, traditionally Boonrawd's territory.

Times for these family monopolies are going to change.

[dale8]

Hello, for the sake of social wellfare the Thai government would help more by using a couple baht tax to enforce the drunk driving statutes with more education on the problems alcoholism will make for families. This new tax threat does smell of lobbying from some of the higher taxed companies, but it can be a good opportunity for the social good of the people in Thailand. This does not mean that the government will do the right thing, but they need more tax money to work with so they will have more power.

[Thai at Heart]

Might the tax on imported wines finally be reduced, under this reform, to be lower than on locally-made spirits ?

Sometime in our great great grandchildren's lifetime.

Lao Kao, and Sangsom/Johnnie Walker and Soda are a human right here. There is absolutely no chance whatsoever that a logical taxation system will be implemented with reference to alcohol

Edited August 26, 2009 by Thai at Heart

[Wuffy]

Taxes should never be used for social engineering.

This is utter stupidity, adding taxes on moral grounds just adds to the complication of getting anything done in the tax system.

If they want people to drink responsibly, stop demonising the stuff, teach people what it is.

What really makes my "BS" meter ding would be how they can look one way and say it's for social benefits, Oh and we checked it would raise our income by Bt30 billion..

Yes... it's for the good of society...

I'm sure that 30 billion wont even be allocated to any kind of education much less education about alcohol.

[basjke]

said the Asean Free-Trade Area would also lead to more cheap imports from lower-cost countries like Laos and China.

I guess this is their biggest concern,how we gonna avoid that our trade partners profit from the free trade agreement we signed.

[Thai at Heart]

Taxes should never be used for social engineering.

This is utter stupidity, adding taxes on moral grounds just adds to the complication of getting anything done in the tax system.

If they want people to drink responsibly, stop demonising the stuff, teach people what it is.

What really makes my "BS" meter ding would be how they can look one way and say it's for social benefits, Oh and we checked it would raise our income by Bt30 billion..

Yes... it's for the good of society...

I'm sure that 30 billion wont even be allocated to any kind of education much less education about alcohol.

The taxation system here on alcohol is actually pretty efficient and can be changed at the stroke of a hat.

When the taxation system actually encourages the consumption of high alcohol spirits over lower alcohol products I think you can safely say, that a bit of social engineering to switch behaviour is actually a good thing.

The wine issue has been used a good bargaining tool with the EU for years.

[Briggsy]

said the Asean Free-Trade Area would also lead to more cheap imports from lower-cost countries like Laos and China.

I guess this is their biggest concern,how we gonna avoid that our trade partners profit from the free trade agreement we signed.

They've already been thinking and negotiating hard on that one and implementation has been delayed for alcohol for many years, 2013, I think. Free trade ASEAN style.

[hammered]

This suggestion is a good idea. However, considering how it may affect one of the most powerful families in the country - whisky and Chang suppliers - it probably wont happen. The powerful families are like super lobbyists.

[Wuffy]

Taxes should never be used for social engineering.

This is utter stupidity, adding taxes on moral grounds just adds to the complication of getting anything done in the tax system.

If they want people to drink responsibly, stop demonising the stuff, teach people what it is.

What really makes my "BS" meter ding would be how they can look one way and say it's for social benefits, Oh and we checked it would raise our income by Bt30 billion..

Yes... it's for the good of society...

I'm sure that 30 billion wont even be allocated to any kind of education much less education about alcohol.

The taxation system here on alcohol is actually pretty efficient and can be changed at the stroke of a hat.

When the taxation system actually encourages the consumption of high alcohol spirits over lower alcohol products I think you can safely say, that a bit of social engineering to switch behaviour is actually a good thing.

The wine issue has been used a good bargaining tool with the EU for years.

I'm not saying social engineering is a bad thing. I'm saying using the tax system to implement social engineering is a bad thing.

The hardest thing to make a government do is remove taxes because it brings in money.

Now when they quote statisics saying it brings in 90 Billion with current taxes and that it will bring in another 30 Billion in taxes with the new system. It sounds more like they are Adding another tax which would bring the economic beer to be priced closer to the standard beer, which isn't really a good business model to have when talking competitive markets.

If you want social engineering let people know the effects of drinking.

I'm not sure if personal experience is valid but I grew up in a culture where drinking was something just done casualy with friends/company.

I never went through binge faze that seemed to happen to most people my age when they could sneak out alcohol (Late teens)

And only have a few glasses now when I do go out.

Mostly I'm trying to say that social awareness should be everyone involved not just a government applying a tax to increase it's income.

[TAWP]

One tax, VAT only, for all merchandise - if any tax has to be added at all - and not different scales, added taxes, scaled taxes etc for different products or content volume rate. >_<

This is exactly the kind of nonsense from back home that one dislikes.

[NHJ]

i don't really see why they think alcohol is cheap in thailand, whisky is only half price of what i paid in belgium while beer is only 30% cheaper but the minimum salary is 8 times bigger there than here....

[dominique355]

If you are serious about fighting alcoholism, it doesn't make sense that a bottle of cheap wine with 12% alcohol costs twice as much as a bottle of 41% whiskey, not to mention all the "white alcohol" (which, according to a specialists is about 70% of all alcohol consumed in this country).

Clearly the excise tax on import alcohol based on the value is misguided. It makes much more sense to tax according to the alcohol content.

And as a by-product we might finally get some decent wines at decent prices here, or am I dreaming?

[mahtin]

What are alcohol-testing devices for individual use?

[Ijustwannateach]

It will be very, very hard after all the nightlife has been based around cheap, relatively high-proof spirits to change over to beers or the like (which even by comparison per drink are relatively expensive). Unless you made the local spirits quite expensive- and imported spirits VERY expensive- careful what you wish for!!!

[MaiChai]

i don't really see why they think alcohol is cheap in thailand, whisky is only half price of what i paid in belgium while beer is only 30% cheaper but the minimum salary is 8 times bigger there than here....

The recent raft of tax rises on alcohol has certainly had an impact on the nightlife in Thailand; one of the big pulls for tourism. If the government continue these tax rises they will kill the golden goose, and the reason alot of people come here. I have certainly noticed its much more expensive than it used to be to go out (and I go out to Thai and farang places). I also notice people go out less and the bars and clubs are hurting! All I can say if they continue this, Thailand will become a deary and boring place and people will look elsewhere to enjoy this type of nightlife (Phillipines is very cheap compared to Thailand for alcohol, etc).

PS: the country folks make their own whisky because they cannot afford the bottled stuff. Thus increasing taxes further will have no impact on these folks! In the country, before it was normal to buy three bottles of beer at one go; now folks can only afford a bottle at a time. Thus the government have already taxed out drinking of beer!

[Wuffy]

i don't really see why they think alcohol is cheap in thailand, whisky is only half price of what i paid in belgium while beer is only 30% cheaper but the minimum salary is 8 times bigger there than here....

The recent raft of tax rises on alcohol has certainly had an impact on the nightlife in Thailand; one of the big pulls for tourism. If the government continue these tax rises they will kill the golden goose, and the reason alot of people come here. I have certainly noticed its much more expensive than it used to be to go out (and I go out to Thai and farang places). I also notice people go out less and the bars and clubs are hurting! All I can say if they continue this, Thailand will become a deary and boring place and people will look elsewhere to enjoy this type of nightlife (Phillipines is very cheap compared to Thailand for alcohol, etc).

PS: the country folks make their own whisky because they cannot afford the bottled stuff. Thus increasing taxes further will have no impact on these folks! In the country, before it was normal to buy three bottles of beer at one go; now folks can only afford a bottle at a time. Thus the government have already taxed out drinking of beer!

This is why Taxes don't work as social engineering.

I don't go out that often in the first place, and actually now that you mention this is exactly why, it's so darn expensive to have a glass of spirits it's unthinkable to have more then a few in an evening.

[bdenner]

What are these people thinking about? Can't imagine the Isaan folks buying a bottle of Lao Khow if it costs more than a Leo or Chang. All I can see is boot-legging and possible poisonings.

[Thunder26]

Actually, in my case, I drink less with the current prices. I cut half in my booze. The prices for beer went to high, just in a year by 10 baht, which is too much I think. 46 B for a Leo? Too expensive, even by european standards.

[dkstoney]

Well, folks, I guess it's time to start up the home brewing operations. It's not that hard to do once you get it down. DIY rules!