Excise tax to be levied on retail prices, not low 'ex-factory' rates: Thailand

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TAX
Excise tax to be levied on retail prices, not low 'ex-factory' rates
Suphannee Pootpisut
The Nation

BANGKOK: -- The Excise Department plans to amend laws as a means to levy excise taxes on "retail prices", instead of ex-factory prices, after finding some businesses understated prices.

The move comes after the National Council for Peace and Order's announcement of its roadmap for economic and tax reform, which is one of the most challenging tasks that the ruling junta led by Prime Minister General Prayuth Chan-ocha faces.

The excise tax is considered the country's second biggest source of income after the revenue tax.

The top five industries paying most excise tax in the fiscal 2013 budget were vehicles (Bt154 billion), beer (Bt69 billion), tobacco (Bt68 billion), fuel/oil (Bt64 billion) and liquor (Bt53 billion).

Somchai Poonsawat, the Excise Department director-general, said that up to now, ex-factory prices were used for excise tax calculation on all products, excluding liquor and beer, but the department would amend seven laws and combine them into one in a final excise tax draft.

The seven laws consist of the Liquor Act, Tobacco Act, Playing Card Act, Excise Tax Act, Excise Tariff Act, Allocation of Excise Tax Act, and the Allocation of Liquor Tax Act.

"The legal amendment aims to have a fair, transparent and internationally standardised excise tax structure through adjustment of excise tax calculations," he said.

Earlier, the Excise Department asked Thammasat University to conduct a study on improving excise tax collection for the whole system. Then related parties were invited for talks and a working committee was set up to study the issue.

"We expect to finalise the study soon and will disclose the result of an excise tax amendment," Somchai said. He insisted the legal amendment would be made without any impact on consumers. Under the new draft, the Excise Department will be authorised to inspect business operators' retail prices. The department said business operators usually give ex-factory prices as a low-level base for tax calculation, while actual retail prices were high. Observers said the burden of taxes would be eventually pushed on to the products' prices.

Source; http://www.nationmultimedia.com/national/Excise-tax-to-be-levied-on-retail-prices-not-low-e-30241872.html


-- The Nation 2014-08-27

[terryp]

and as prices rise so will peoples wage demands and then ..thialand becomes less competitive ...all for insatiable tax revenue that basically just runs the big outdated government

Thailand have you learnt nothing from the wests mistakes? obviously not....you dont even have a welfare state but still need more and more tax...stupid

[Suriya4]

More tax mean poorer Thais is comparison to richer Falangs.

[Ricardo]

More tax mean poorer Thais is comparison to richer Falangs.

"richer Falangs"

I would have thought that an increase in Excise-rates would affect both Thais/farangs equally ? Which seems fair.

Anyway the current stronger-Baht makes us poorer too, just at the moment.

You cannot make poorer people rich, simply by passing laws, or being envious of our supposed Good-Luck, there are plenty of poor people in my home-country too !

Perhaps the "poorer Thais" need to work harder, and earn more, like I used to when I was working & prices/taxes went up ?

Nevertheless, it's now 18-months since the much-delayed Yingluck-government's increase in minimum-wage rates, I'd certainly agree that some increase is overdue, if only to cope with the higher cost of Thai rice, for which she was also responsible.

[shirtless]

Raising taxes for what, All this does it reduce peoples disposable income, more money goes to the government and is sadly never seen again,

[trogers]

Sounds like they want us to pay value added tax (VAT) twice.

[maoro]

Can't see how they can m ake this work. Retail price of most goods is set by the retailer.

Much of the sales are through small stores around the country and they are not in the tax system at all, getting excise from them would be impossible.

Only way would be to estimate the retail price and levy the excise at the manufacturer or distibutor level.

[AyG]

internationally standardised excise tax structure

So why no mention of reform of alcohol taxation? Is there any other country in the world that doesn't base taxes on alcohol content?

Edited August 27, 2014 by AyG

[Prbkk]

and as prices rise so will peoples wage demands and then ..thialand becomes less competitive ...all for insatiable tax revenue that basically just runs the big outdated government

Thailand have you learnt nothing from the wests mistakes? obviously not....you dont even have a welfare state but still need more and more tax...stupid

Yes, I agree that Thailand has BIG government and that that issue needs to be addressed . However, the other pressing problem is that simple fact that Thailand has a system in which it is far easier for people to avoid and evade paying the tax they owe. If the junta can solve that they will have achieved more than any preceding govt. Certainly trying to squeeze a baht of tax out of the elite has difficult for decades.

[madmitch]

Confused!

The retail price surely is the price that already includes all taxes, including VAT, import and excise duty.

Looking forward (not!) to seeing the price of a bottle of imported beer or wine after these changes apply.

[gemini81]

More tax mean poorer Thais is comparison to richer Falangs.

What an ignorant, backwoods farmer remark. ANYONE who falls under the taxation in Thailand is affected. Have you ever journeyed out from the rice paddies to see all the rich Thais in BKK, Pattaya, Khao Yai or Phuket????

Foreigners abroad in other places are taxed much heavier especially when it comes to income tax, unable to evade it. (rich thais poor falangs?)

Thailand just has a terrible imbalance of taxing the heck out of imported items, sin tax, but failing to collect much on personal income tax.

Edited August 27, 2014 by gemini81

[jpeg]

More tax mean poorer Thais is comparison to richer Falangs.

Oh will you give it UP. I've never seen so many fancy cars driving around Bangkok and Phuket by THAIS, than any other country in SE Asia. So some of you are doing okay in your Third World country, aren't you

[useronthenet]

Prices generally are spiraling out of control. If there was a further levy, then this could really effect inflation. As a holiday destination, Thailand is becoming increasingly expensive, and those wishing to visit the kingdom might look elsewhere for a cheaper solution. As for local Thais, then they could demand yet higher wages to compensate for any increase, thus a continuous cycle occurs.

[rethaier]

Paying excise on the retail price may not be good for the people but it is the way it is everywhere else I have been. Go to the US and buy something marked at $10.00 and the checkout price will be $10.00 plus tax.

[tartempion]

Paying excise on the retail price may not be good for the people but it is the way it is everywhere else I have been. Go to the US and buy something marked at $10.00 and the checkout price will be $10.00 plus tax.

Not been in Europe then?

That's not how VAT works

[rreddin]

Paying excise on the retail price may not be good for the people but it is the way it is everywhere else I have been. Go to the US and buy something marked at $10.00 and the checkout price will be $10.00 plus tax.

Indirectly, you have highlighted a problem with this proposal, which is enforcement. The big retail chains and supermarkets are geared up to do adding purchase tax at the point of sale. They have computerised tills and stock price controls. Now go to the mom and pop store. They are unlikely to be registered for VAT and their profits are probably low enough to avoid having to pay income tax. They have no till, do not give a receipt, and only deal in cash.

If this proposal does become law, some big changes may be needed to ensure it is effectively enforced, and there might be some unintended consequences as a result.

[12DrinkMore]

Raising taxes for what, All this does it reduce peoples disposable income, more money goes to the government and is sadly never seen again,

No roads, schools or hospitals where you live then?

[Thai at Heart]

Raising taxes for what, All this does it reduce peoples disposable income, more money goes to the government and is sadly never seen again,

There are too many Thais not.paying their share. They evade taxes for fun.

As.for never seen again, when u are in hospital or.drop your car into a potholel

, think again

[Thai at Heart]

Paying excise on the retail price may not be good for the people but it is the way it is everywhere else I have been. Go to the US and buy something marked at $10.00 and the checkout price will be $10.00 plus tax.

Indirectly, you have highlighted a problem with this proposal, which is enforcement. The big retail chains and supermarkets are geared up to do adding purchase tax at the point of sale. They have computerised tills and stock price controls. Now go to the mom and pop store. They are unlikely to be registered for VAT and their profits are probably low enough to avoid having to pay income tax. They have no till, do not give a receipt, and only deal in cash.

If this proposal does become law, some big changes may be needed to ensure it is effectively enforced, and there might be some unintended consequences as a result.

Mom and pop will have to get a till then won't they.

[Estrada]

Paying excise on the retail price may not be good for the people but it is the way it is everywhere else I have been. Go to the US and buy something marked at $10.00 and the checkout price will be $10.00 plus tax.

It is not the way everywhere else. In the UK and certain other Countries the retail price must be the actual sales price including all taxes, whereas other countries add the tax at the check out.

Secondly there is a difference between Excise Tax, which is a duty on the original import or ex-factory price and Value Added Tax. VAT is added at each stage of the supply chain and then claimed back by all the entities in the chain except the the end customer.

What they are proposing is to add the excise tax as a percentage of the retail price before adding VAT at the point of sale which would raise a considerable higher revenue. It would also reduce the corruption relating to each stage of the supply chain.

The problem, as they state, is that many importers/factories underdeclare their ex-works price. If they can do that they have to pay less VAT/Excise Tax up front. This is partly the fault of the VAT Department because in the past they have hung onto the Companies' VAT repayments due for many months causing severe cash flow problems. This could often be allieviated by paying a considerable "Incentive" to the VAT Official.

[phoenixdoglover]

Paying excise on the retail price may not be good for the people but it is the way it is everywhere else I have been. Go to the US and buy something marked at $10.00 and the checkout price will be $10.00 plus tax.

Here is how it works in the US.

Excise taxes (say, on cigarettes or gasoline) are included in the retail price of the items. Excise taxes are collected by the Federal and State Governments, and often are directed to specific funds. For example, the gasoline excise tax is put into highway funds, dedicated to upkeep of the roads.

Sales tax is added on to the sales price of the item. So in some cases there is a "tax on the tax". Sales taxes are collected by State and Local governments, and go mostly toward public education and government operating expenses.

[Dah fahrang]

But, remember, it has been decreed that "happiness be returned to the people" - so, they will pay these, and any more taxes the junta cares to levy, with huge grins on their faces. "Be Happy and Pay Up". (New slogan?)

[belg]

30% corruption on everything ... why not try to cut there a bit ?