Hike In Excise On Cigarettes And Liquor Backed: Thailand

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EXTRA REVENUE

Hike in excise on cigarettes and liquor backed

The Nation

Lao khao to rise by up to Bt10 per bottle today but beer, wine not affected

BANGKOK: -- Smokers of imported and local cigarette brands, plus drinkers of liquor - known locally as lao khao - will be hit by a rise in excise tax. The Cabinet yesterday backed a higher excise on cigarettes and white liquor, citing a policy to boost the health of Thai people as the reason.

But some observers said the "sin tax" hike was a desperate bid to help the country's cash-flow problem. Drinkers of beer and wine will not be affected, because the hike, which is effective from today, will not be imposed on such drinks.

Bt1.3 billion extra revenue

The hike is expected to raise about Bt1.3 billion annually, Excise Department director-general Benja Louicharoen said yesterday. The hike would be beneficial in terms of tax collected on cigarettes on the by-value basis, because rates on cigarettes would be the same, however cheap the old rates were.

"However expensive or cheap the cigarettes, the rates will be the same after the hike, as cigarettes are detrimental to health, whatever the brand," she said. The hike had to take effect immediately to stop hoarding or favouring any traders, she added.

The rate on blended whiskey will increase to Bt350 from Bt300 per litre, while the rate on white spirit would rise to Bt150 from Bt120, and the rate on imported whiskey would be Bt400 per litre.

For cigarettes, the hike will see an increase of between Bt6 to Bt8 per packet of eight local and imported brands, Benja said.

Cigarette hike 2% on average

The hike on cigarettes was about two per cent on average, from 85 per cent to 87 per cent, while the Excise Department can increase it to 90 per cent - a legal ceiling - which meant another hike in the future was possible, Benja said. On the hike on liquor, she said the tax on white spirit was chosen, with the rate not reaching the ceiling, because it had not been increased for a long time.

"The hike in taxes on liquor should mobilise around Bt2 billion to Bt3 billion each year," she said. The new prices per-bottle of white spirits, which is consumed mostly by low-income earners, should be around Bt5 to Bt8 more, and not more than Bt10, she said.

The hike would inevitably affect Blend 258, a local brand which is the market leader. Produced by Thai Beverage Plc, it sold three million cases last year, a source in the industry said. ThaiBev's Hong Thong, Mekong, and Sangsom brands will also be hit.

Surapol Supradit, a consultant in development and tax for the Excise Department, said later the excise hike on liquor would raise about Bt2 billion in tax revenue annually. But it was unlikely to affect consumption, as drinkers were not sensitive to price of alcoholic beverage.

The hike may cause the retail price of white spirit to rise by no more than Bt10 a bottle, he said.

In regard to different tax rates for locally produced and imported drinks, an excise tax official who asked not to be named said it did not counter agreements under the World Trade Organisation, since different tax rates apply to different kinds of liquor.

An industry source said the rises showed the government was looking to generate extra revenue in order to compensate for revenue that had been lost.

It also showed the government was trying to reduce inequality between local and imported alcohol companies, which has recently been a topic of discussion.

Drinkers may switch to beer

The source said the tax hike would raise the retail price of blended spirit by Bt5 to Bt7 per bottle but would have no significant impact to consumption. However, some price-sensitive drinkers may switch to beer, which could benefit from the change.

The tax rate for brandy - a special spirit, and the last type of imported alcohol for which the tax rate has not yet reached the limit - will be raised from 48 per cent to its limit of 50 per cent (by sale value).

Imported scotch whiskeys, however, would get no benefit from the rise, as the price gap with blended liquors is still high.

Another industry source said: "Every few years there has been an increase in excise taxes. The last one was three years ago, so this is nothing unexpected. We don't foresee a significant impact."

-- The Nation 2012-08-22

[Thai at Heart]

A bottle of sang som for anyone who can interpret the graphic correctly.

[Reasonableman]

A bottle of sang som for anyone who can interpret the graphic correctly.

I hadn't realised cigarettes contain alcohol before this.

[Thai at Heart]

Absolute madness that they tax it on a calculation of pure alcohol per litre.

[Notstupid30]

Don't drink so often so they want be getting much from me also cigarettes still cheap when you look at the Price back in England a pack of 20 B&H is 350THB or a pack of 10 190THB

Edited August 22, 2012 by Notstupid30

[ratcatcher]

Now all those beer and wine drinkers going into cardiac arrest about huge price hikes can relax as apparently those two are unaffected by this latest grab. For now.

As for Lao khao, I thought that was the beverage of choice of a vast number of rural and poorer people, perhaps the main voter base of Puea Thai? That should be interesting.

On a petty note, the Scots do not produce whiskey, I believe that is the Irish and Americans product.

Edited August 22, 2012 by ratcatcher

[somtumlion]

On a petty note, the Scots do not produce whiskey, I believe that is the Irish and Americans product.

Ummmm, yeah, ok....

http://en.wikipedia.org/wiki/Scotch_whisky

[LennyW]

On a petty note, the Scots do not produce whiskey, I believe that is the Irish and Americans product.

Ummmm, yeah, ok....

http://en.wikipedia....i/Scotch_whisky

Indeed, please do not confuse Whiskey with proper Whisky!!

[Semper]

Beer not affected!

[ratcatcher]

On a petty note, the Scots do not produce whiskey, I believe that is the Irish and Americans product.

Ummmm, yeah, ok....

http://en.wikipedia....i/Scotch_whisky

OK,thanks.

http://grammarist.co...whiskey-whisky/

[Ricardo]

Beer not affected!

"Beer not affected"

On the contrary, it will taste all-the-better, in future !

[Moruya]

A bottle of sang som for anyone who can interpret the graphic correctly.

I hadn't realised cigarettes contain alcohol before this.

2 litres in each pack!

[Moruya]

I wonder how long it will be until they change the legislation that imposes a limit?

Someone has to pay for all the commitments. May as well be the revolting masses as this is the only tax they pay anyway

[maidu]

Doubtful the tax will apply to rotgut moonshine (40% alcohol) sold in most mom & pop stores throughout Thailand. Top Bananas in Bkk probably figure, "Well, if they're so pissed-in-their-pants drunk that they can barely hobble down the street, they can't be a political threat to us, can they?"

[QED]

"For cigarettes, the hike will see an increase of between Bt6 to Bt8 per packet of eight local and imported brands, Benja said.

Cigarette hike 2% on average"

Bt6 to Bt8 per packet is more like 10-15%. Apparently this comes into force today - anyone been to the shops for some smokes? What was the price increase and brand? I am in Hong Kong for a few days, just interested to know how much I will have to pay when I get back.

And please don't turn this into another smoking haters thread, there are plenty of those where you can go and procrastinate.

[MunterHunter]

Doubtful the tax will apply to rotgut moonshine (40% alcohol) sold in most mom & pop stores throughout Thailand. Top Bananas in Bkk probably figure, "Well, if they're so pissed-in-their-pants drunk that they can barely hobble down the street, they can't be a political threat to us, can they?"

More like "Well, if they're so pissed-in-their-pants drunk that they can barely hobble down the street, they can't be a political tool for us, can they?"

[h90]

A bottle of sang som for anyone who can interpret the graphic correctly.

I hadn't realised cigarettes contain alcohol before this.

2 litres in each pack!

But only tax 1 Baht for it. Maybe I should start drinking cigarettes

[RogueExpat]

Another "hidden" tax imposed mainly on the poor who can least afford it.

Oh well, they could just stop smoking drinking.

[WinnieTheKhwai]

This is already a lot more sensible than the mad reporting (which this forum over-eagerly jumped on) of yesterday.

Sensible increases. The main impact is to Lao Khao and drinks like Sangsom. (Which does affect me because I'm rather partial to Sangsom, but hey, it's a 14 baht increase on a bottle. And Sangsom seem to want to go a bit up-market all by themselves anyway, looking at the new bottle and label design, which includes the plastic fluid-limiter thingie at the business end of the bottle.

Edited August 22, 2012 by WinnieTheKhwai

[WinnieTheKhwai]

Another "hidden" tax imposed mainly on the poor who can least afford it.

What are you talking about? How is it more hidden than any other tax? And it's announced in all the papers and on TV; what more could they possibly do?

Also, the poor just got a big raise in minimum wage, and money is also thrown at rice farmers. In return, they (along with everybody else) can pay a bit extra for non essential luxuries like liquor and cigarettes, which by the way also cause health issues that the government largely pays for when it comes to the poor. So it makes PERFECT sense, especially if you subscribe to the more social-democratic part of the political spectrum.

Edited August 22, 2012 by WinnieTheKhwai

[TallGuyJohninBKK]

Of course, the crappy article and graphic above contains a couple of quotes suggesting the government doesn't think consumption will be reduced much at all....

Surapol Supradit, a consultant in development and tax for the Excise Department, said later the excise hike on liquor would raise about Bt2 billion in tax revenue annually. But it was unlikely to affect consumption, as drinkers were not sensitive to price of alcoholic beverage.

As for the article, better than yesterday's, but still what a mess. 12 billion baht revenue in the graphic text. Then 1.3 billion per year from the increase on cigs and drinks... Then 2 to 3 billion per year on the tax just on liquor, quoting the same official. Then a different guy saying 2 billion per year just from the tax on liquor.... Yeesh!!!!

[Moruya]

A bottle of sang som for anyone who can interpret the graphic correctly.

I hadn't realised cigarettes contain alcohol before this.

2 litres in each pack!

But only tax 1 Baht for it. Maybe I should start drinking cigarettes

Think I'll join you!

Pint of Marlboro please barman!

[TallGuyJohninBKK]

I've never lived upcountry, so I can't profess to be knowledgeable on the drinking habits of Pheu Thai's main constituency....

But I'm curious: what portion of the distilled liquor consumed by those folks is likely the locally (village) made rot gut that presumably escapes all taxation vs. what portion is actually the commercial and taxed stuff purchased through stores???

[Moruya]

I've never lived upcountry, so I can't profess to be knowledgeable on the drinking habits of Pheu Thai's main constituency....

But I'm curious: what portion of the distilled liquor consumed by those folks is likely the locally (village) made rot gut that presumably escapes all taxation vs. what portion is actually the commercial and taxed stuff purchased through stores???

I've never seen hooch being sold. The rice whisky (the Celts can debate whether there should be an "e" in there) is cheap enough. 40-50b for a half litre.

You could probably make a reasonable sangria with it!

[chainarong]

Christ for a moment there I thought I was back in OZ.

[meatboy]

Beer not affected!

does that mean cider as well? wf said i have to cut down by half,no sleep last night,now if thats the case i need a drink now.

[qdinthailand]

After a full night of stupid speculation on TV, in the light of day when the full details come out, the 'hit' isn't as bad as everyone speculated.

I guess that means some of you won't be packing up and leaving Thailand.

[MunterHunter]

I guess that means some of you won't be packing up and leaving Thailand.

Shame, some of the posters are long over due to leave

[chooka]

"For cigarettes, the hike will see an increase of between Bt6 to Bt8 per packet of eight local and imported brands, Benja said.

Cigarette hike 2% on average"

Bt6 to Bt8 per packet is more like 10-15%. Apparently this comes into force today - anyone been to the shops for some smokes? What was the price increase and brand? I am in Hong Kong for a few days, just interested to know how much I will have to pay when I get back.

And please don't turn this into another smoking haters thread, there are plenty of those where you can go and procrastinate.

Australia increase the taxes on cigarettes/booze every year saying it will reduce the number of people smoking/drinking. Didn't work in all the previous years people still smoked and consumed alcohol. Now they have come up with a world 1st initiative to stop people smoking, plain packaging, cigarette companies can no longer put thier brand on packets which must all be the same plain pack. Apparently this will make people kick the habit. Now we have the Australian State of Tasmania with a new initiative to ban the sale of tabacco products..

Tasmania in bid to phase out tobacco sales - http://news.ninemsn.com.au/national/8520129/tasmania-in-bid-to-phase-out-tobacco-sales

A little like phasing in Prohibition, people will still smoke and drink and the only thing it will do is benifit the black market. A lot of cheap booze and chop chop tobacco will be sold under the counter at less cost to the consumer.

[Arkady]

I see that yesterday's shoot from the hip thread "Shock Rise On Imported Alcohol by 400 baht a litre" that generated loads of hits and 11 pages of comment came to a sticky end after it was revealed that there is actually no change in the excise duty. Nice one.