Will Drinkers Toast New Thai Liquor Tax?

[webfact]

Will drinkers toast new liquor tax?

By NOPHAKHUN LIMSAMARNPHUN

THE NATION

Published on December 24, 2009

Excise tax ceiling to be raised; foreign beers, liquors will be subject to a zero import duty under Afta scheme

An executive decree will be issued shortly to raise the excise tax ceiling on alcoholic beverages in preparation for the implementation of the Asean Free Trade Area (Afta) on January 1, a source from the Finance Ministry said yesterday.

The Cabinet is expected to consider the measure on Tuesday, just before the arrival of 2010 when all imported beer and liquor will be subject to a zero import duty under the Afta scheme.

Finance Minister Korn Chatikavanij yesterday declined to comment on the planned excise hike.

However, official sources say the excise ceiling on beer, for instance, is expected to rise from Bt100 to Bt460 per litre based on alcohol content, while that of distilled white spirits and whisky will rise from Bt120 to Bt400.

PREVENTING DUMPING

The planned hike should help prevent cheaper foreign-made alcoholic drinks being dumped in the Thai market once liberalisation is in place.

"Alcoholic beverages damage consumers' health, so it's necessary to use the excise tax as a measure |to manage consumption. Compe-tition in the alcohol industry should also be curbed because fiercer competition as a result of market liberalisation will lead to more consumption.

"In addition, the government should enforce a law banning the advertisement of these products to prevent further damage to public health," said a ministry official, who asked not to be named.

Under the Afta scheme, Thailand and other Asean countries will be opening up their domestic markets to boost trade within the 10-country grouping.

From January 1, several types of products - including alcohol - will benefit from the zero import tax rate, allowing an influx of cheaper beer and liquor from within the region.

At present, Thailand is the largest market for alcoholic beverages in Asean, followed by the Philippines and Vietnam.

Sources say Chinese beverage firms with production facilities inside Asean are expected to flood the Thai market with cheap beer and liquor. In addition, some European firms are already using production facilities within Asean to supply low-cost products to the Thai market.

If the excise tax ceiling does not get adjusted before Afta is enforced, Thai producers will be hit hard by the dumping of foreign products.

Beside beer, competition in the distilled white spirits and whisky market segments is also expected to be fierce due to the reduction of import duty.

-- The Nation 2009/12/24

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[theoldgit]

Any chance that wine will become cheaper than whisky?

[Phatcharanan]

Nope

[asiawatcher]

So much for Free Trade... scum bags - I'll drink to that!

[gotlost]

Nope

Most the wine in Thailand is <deleted>.

[QED]

Scumbags is right, they should be tossed out of ASEAN for blatantly ignoring the free trade rules, and replacing import duties with selective excise duties, which I am sure the majority of Thai produced booze will be exempt from due to some bizarre loophole or other.

[paulandmaneerat]

The article says 'Beer and Liquor'. Does that include wine?

P&M

[chickencurry]

So what exactly does this mean for locally produced beers, spirits? They will stay at the same price? But the imported beers, spirits will be subject to new tax?

[RegularReader]

I think this article is an example of very poor, unresearched journalism, which seems typical of so much Thai media, when it comes to "social" issues.

The dropping of the import duty will only level the playing field - that is the issue for the local alcohol manufacturers. It will become more competitive - particularly for the beer and spirits companies.

Whether or not the government decides to increase the excise tax, is not the issue, because ALL alcohol will be affected. But in reletive terms a bottle of whiskey now imported from say the Phillipines will now be able to be landed in Thailand at a price which could make it quite competitive to the Thai manufactured item. Similarly, the Thai company can now export a bottle of local whiskey to say the Philippines.

But, of course this could also show which of the companies is more cost efficient....or perhaps the fear is "inefficient"!

Further, if Thailand decides on using this in some way, to maintain a "local protection", it sort of makes a mockery of the FTA, doesn't it ?

Edited December 24, 2009 by RegularReader

[ricklev]

I read that article three times this morning trying to figure out what it meant and why they would publish it. The only explanation I could come to was that Thai liquor producers and distributors have a lot of power over the media and the political system.

[rohitsuk]

AFTA starts with a bulls-eye !

The import duty on foreign booze is dropped so the internal excise duty is raised to make ALL booze more epensive, in order to protect domestic producers and the population from itself, by curbing excessive drinking.

Another ministerial masterstroke, like cannot buy booze between 2-5pm (except 10 litres or more) which has drastically reduced the abuse of alcohol, of course. Thai logic to a "T", an exercise in total futility generously laced with hypocrisy and the nauseating odour of sanctimony. Right round ASEAN and back to square one.

They have been taking lessons from the EU - mark my words we will get "green" taxes soon.

[basjke]

I'm sure that there is something short in the article and that they mean "excise tax on imported alcholic beverages" instead of all alcoholic beverages.Otherwise how would they prevent foreign imports from competitive with local products.

This is what this government does with all trade agreements.They consider trade agreements to be one sided,only to profit them.

[h90]

Do I understand that right:

"Bt100 to Bt460 per litre based on alcohol content"

Say I have a 0.33 can beer with 5 % Alcohol:

460x0.33x0.05=7.6 Baht per can Alcohol tax?

[chickencurry]

I'm sure that there is something short in the article and that they mean "excise tax on imported alcholic beverages" instead of all alcoholic beverages.Otherwise how would they prevent foreign imports from competitive with local products.

This is how I read it, but it doesn't actually say that, does it? It makes no sense but, then again, what does in Thailand.

[h90]

I'm sure that there is something short in the article and that they mean "excise tax on imported alcholic beverages" instead of all alcoholic beverages.Otherwise how would they prevent foreign imports from competitive with local products.

This is what this government does with all trade agreements.They consider trade agreements to be one sided,only to profit them.

An "excise tax" on imported goods is called import duty.

Don't tell me someone got the idea to just "rename" the import duty to "excise tax for imported goods only" to get around FTA agreements......

Does anyone know if that might be the fact??

[craigt3365]

I have read this 3 times also. From what I see, ALL booze will get the tax. Not just imported. I am pretty sober right now, maybe that is why I don't understand this. Free trade means no import duty. OK. But if they raise the excise tax, that will make Thai booze more expensive also. Maybe the local stuff has more room to lower prices? And thus keep it under the foreign stuff? Or at least keep it where it is now. But if foreign booze is cheaper even with the excise tax, they will kill the local market anyway!

Jeez, I just wish they would allow us to get some good wine! The prices here are just insane. I was recently in Italy and Spain...it was great to get a liter of pretty decent stuff for 3-5 euros....or less!

[Bengt]

Good idea to increase tax on alcohol coz its kills to many ppl not only in Thailand its the biggest drug problem worldwide so i think 250 THB for a beer is good and about 2000 THb for a litre of vodka then maybe the traffic accidents will decrease to a minimum compared as it looks today

[rucus7]

I plan to boycott this by, not purchasing liquor, whether it is domestic or imported, wine, beer or spirits. Who will join me in rejecting this tyrannical sin tax?

[DegenFarang]

I plan to boycott this by, not purchasing liquor, whether it is domestic or imported, wine, beer or spirits. Who will join me in rejecting this tyrannical sin tax?

not me. Though I'd be game for not drinking any Thai booze

[StreetCowboy]

I don't think that increasing excise duty will lower consumption, particularly for problem drinkers. It merely shifts the tax burden to the families that can least afford it, and gives them the problem of poverty to add to their other miseries.

My interpretation of the government's plan was to increase the levy on all alcohol to mitigate the loss of revenue from import duties, and, by increasing the price of alcoholic drinks, the fluctuations in actual cost between imported and locally produced drink will become less significant. Since I only drink beer, and rarely imported beer, I can't really give examples.

I would guess that the current level of excise duty is well below the 100 bht / litre ceiling, as 100 bht / litre is about 33 bht per can, or 95% - 100% of the cost of a tin of SIngha, as I recall.

Although I think that it is regressive to punitively raise alcohol taxes, I do appreciate that at least it is a tax that you have a choice about paying, and if you object strongly, you don't need to drink. Or smoke.

SC

[mahtin]

So how much am I now going to have to pay for my Beer Lao in the 7, when it finally arrives?

[slimdog]

So how much am I now going to have to pay for my Beer Lao in the 7, when it finally arrives?

If my maths is correct....A can of beer (0.330 ml) with 5% alcohol will cost an extra 6 baht

For Thailand as a whole this works out at additional revenue of 18 billion baht per year for local beer alone*.

*Based on a 2008 report quoting 1999 figures which states that Thailand manufactures approx 1 billion litres of beer per year

Beer Chang = 607.5 million litres

Singha/Leo = 364.9 million litres

Heineken = 45 million litres

Carlsberg = 17.4 million litres

Tiger/Kloster = 13.1 million litres

source: http://www.waset.org/journals/waset/v43/v43-90.pdf

1 billion litres of beer @ 5% = 50,000,000 litres of alcohol x additional 360 baht = 18 billion baht (+/- depending on difference between imports/exports)

[nisakiman]

Any chance that wine will become cheaper than whisky?

This was my first thought also. It's something that drives me crazy about Thailand - I don't drink a lot of beer, although I like a cold one, I rarely drink spirits, but I do drink wine. It's my normal evening tipple, and here in Greece, I pay 9 euros for a 5 litre bottle of very drinkable local red wine (agioretiko) from a wholesaler. (10 euros for a Cabernet Sauvignon.) Makes it an affordable indulgence. But the crazy raft of duties, taxes etc makes very cheap and nasty wine an expensive luxury in LoS.

With Australia being part of ASEAN, surely the dropping of import duties will make Aussie wine cheaper, even with increased excise duty.

It's not as if there's a well established wine industry in Thailand they need to protect. (Spy, anyone? ) Yes, I know there's a couple of wineries, but they're still fledgeling, and what I've tried hasn't impressed....

[Rdrokit]

Just another example of coruption in Thailand and how powerful the Thai companies with money are. They can buy the votes to impose an excise tax and kill Free Trade. Thailand should be kicked out of ASEAN.

[NHJ]

australian wines will get a reduce import duty from 54% to 40% and will be totally duty free in 2015.

http://www.flex-news-food.com/files/Wine_Thailand_270809.pdf

[wintermute]

As soon as I heard about the new ASEAN foreign liquor import agreement I knew Thai legislation was going to sneak in some sort of import tax under the radar to counter it. Thai beer companies can NOT stand on their own two feet without government protectionist policies because the product is inferior. Singh, Chang, etc.. can't hold a candle to the majority of imports and these Thai companies have powerful lobbies because they are a virtual monopoly with their hands in everything. Just look at all the crappy evening tv shows on Thai channels, nearly all the sponsors are related to alcohol.

Edited December 25, 2009 by wintermute

[Sisaketmike]

Any chance that wine will become cheaper than whisky?

Is that why most poor people drink lao kao and die young? Mostly farmers and they are not allowed to make their own Satho? (Rice wine) Can't get it. Okay tax closes eyes.

[tutsiwarrior]

what status does a product that is produced elsewhere but bottled in Thailand have under the new excise tax regulation? my current tipple is Gilbey's vodka, produced in the Phillipines and bottled and marketed by a thai company...presently 320 baht at Lotus.

[gregb]

The only people who will truly benefit from an oppressive tax scheme is organized crime. Why not just enact prohibition? The US tried that many decades back, and it was quickly rescinded when politicians realized what they unleashed. Keep the taxes reasonable, and people will pay it. At least that way, you keep the booze above board.

Try to do something stupid though and make taxes unreasonably punitive, and all you get is a bunch of shops buying from the mafia/police and selling smuggled liquor instead. All it requires to arrive at this situation is to make the taxes oppressive enough to make it worth someone's while. Once the pot is big enough to spread around, a new industry will be born.

Wine is a perfect example of this. I can't tell you how many Hi-So Thais I know who have a stocked wine cellar smuggled from Malaysia. I myself have partaken in several events where wine was served without the accompanying tax receipts, and boasted about no less. There needs to be some kind of reform in the alcohol tax structure, sure. But oppressive tax schemes are not the answer. Those cause more problems than they solve.

[Thai at Heart]

http://nationmultimedia.com/2009/12/26/opi...on_30119250.php

Hiding in the Nation somewhere. The beer companies must have paid a lot to get stories like this planted in the papers.

This one quote I particularly like.

However, most imported beverages are under-invoiced so the ad valorem rate will not be effective in managing consumption once the domestic market gets liberalised under the Afta scheme.

Those nasty evil, corrupt importers ripping us off and taking advantage of the youth of Thailand. We must tax them to make sure that the morally upright Thai companies face a fair chance in battling for the tastes of the Thai drinker.

In other words, the excise system is distorted, which means it's time to have it restructured, especially as the country opens up the beer and liquor market to fiercer competition under the Afta scheme.

As conclusions go, whilst written like a 16 year olds history paper, there was never a truer word written.