Liquor and cigarette companies suspected of attack on 'sin tax' revenue

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Liquor and cigarette companies suspected of attack on 'sin tax' revenue
Chularat Saengpassa
The Nation


Supreda

BANGKOK: -- THE Health Promotion Foundation has voiced suspicion that some liquor and cigarette firms are behind efforts to ban the use of an earmarked tax.

An earmarked tax is a tax whose revenues are, by law, reserved solely for a specific use or group; for example, the health of the community.

Since its establishment in 2001, the foundation has earned income from the collection of earmarked tax in an amount equivalent to two per cent of revenue from so-called "sin taxes".

The foundation has used the money to promote the health of Thais via various measures including campaigns against smoking and alcohol consumption.

"I think the firms affected by the foundation's work have lobbied political-office holders into banning the earmarked tax," foundation's deputy CEO Dr Supreda Adulyanon said during an exclusive interview with Nation Multimedia Group.

He was referring to Article 190 of the charter draft, which seeks to ban the earmarked tax. According to this article, the current recipient of the draft shall enjoy the earmarked tax for no more than four years after the new Constitution takes effect.

Supreda said some people had supported the ban of an earmarked tax only because they misunderstood that the foundation took away two per cent of what should go to the state coffers.

"But the truth is that the country still gets 100 per cent of the taxes imposed on sold liquor and cigarettes. It's just that an additional two per cent in sin taxes are imposed on these products to raise funds for the foundation," Supreda explained.

He said if the earmarked tax for his foundation ended, liquor and cigarette businesses would benefit.

Critics, so far, have said that the foundation earned about Bt4 billion a year - but its budget use is not subject to clear scrutiny, unlike what happens to state agencies.

To get a budget from the government, state agencies usually have to plan at least two years ahead as their budget plan will be a part of the annual budget act. The government presents an annual budget to Parliament or the National Legislative Assembly to deliberate before it can become a law.

Supreda said budget use by the foundation was scrutinised by the foundation's board, the foundation's performance evaluation committee and the Office of the Auditor General.

"We have also reported our budget to the Cabinet, the Parliament and the Senate." He said the remaining portion of the budget each year was added to a revolving fund, which is invested in low-risk investments to generate money to be used in emergencies.

He said clear measures were also in effect to select and approve projects that receive funds from the foundation.

"For example, if a project requires over Bt20 million budget, it needs to be checked by seven specialists before another committee approves it."

'Streamlined process'

He said the foundation enjoyed a more streamlined process compared to state agencies. And this streamlined approach allowed the foundation to avoid bureaucratic red tape.

When asked why the foundation did not call for bids, Supreda said the foundation had made fund-approving decisions based on performance.

"If a credible partner comes forward, why shouldn't we support its project? This partner, after all, has delivered impressive performance before," he said. At present, the foundation has had more than 10,000 partners, both new and old.

Supreda said the foundation could continue to operate if the government deprived it of the earmarked tax. He complained that the normal budgeting could pave the way for political intervention, which might arise out of lobbying by liquor or cigarette firms.

Statistics show that 25 per cent of Thais aged at least 15 years old were smokers in 2001 - the year the foundation first started its operation. But in 2012, the percentage dropped to just 19.94 per cent.

Supreda said the foundation's income rose because liquor and cigarette prices had also increased. By comparison, ThaiPBS, the broadcaster that gets an earmarked tax, is required to receive no more than Bt2 billion a year.

"There should not be any cap. Otherwise, the budget for health promotion would in effect be shrinking. We need to take the inflation rate into account," he said.

Source: http://www.nationmultimedia.com/national/Liquor-and-cigarette-companies-suspected-of-attack-30266253.html


-- The Nation 2015-08-10

[Hayduke]

Not surprising that the cigarette and liquor interests oppose this tax. Business is business. But does it really affect them that dramatically? They can easily cover it through pricing.

Do these interests care about how these funds are dispersed/accounted for? They pretend that they are and talk about transparency (another popular, if undefined term) but it looks like they're just trying to loophole the tax itself.

People who enjoy these products will generally absorb whatever costs necessary. If tobacco use is declining it's more likely from a sense of health awareness than any taxes involved.

As for alcohol use...well, evidence suggests that no one really has a grip on that anyway.

Edited August 10, 2015 by Hayduke

[ThaiWest]

What the hell is a "sin" tax? Isn't the current views beyond such a thing? A "Sin tax" is nothing more than a TAX on any person who happens to engage in an activity that is 'socially or politically ' unacceptable... BUT still LEAGEL!

Edited August 10, 2015 by ThaiWest

[razer]

WoW! ... Let's see now ... How many taxes we can impose on one product.

Import tax 200-400%

VAT

Sin Tax

Carrying Tax (for carrying the product away from the store)

Storage Tax (for storing the product in the store and at the consumer's home)

Consumption Tax (for actually consuming the product)

Disposal Tax (for the disposal of the product packaging)

... any other ideas on a new tax for a product?

Admittedly I was inspired by the imagination of the EU parliament

[ThaiWest]

And that makes it "socially" an unacceptable TAX!

[phil2407]

4 billion and no "checks on the people, salaries "

I'm guessing that the accounts manager is very good!!!!!! Why have a company / foundation -that is not checked - and probably get same answer TIT

[Oziex1]

Not surprising that the cigarette and liquor interests oppose this tax. Business is business. But does it really affect them that dramatically? They can easily cover it through pricing.

Do these interests care about how these funds are dispersed/accounted for? They pretend that they are and talk about transparency (another popular, if undefined term) but it looks like they're just trying to loophole the tax itself.

People who enjoy these products will generally absorb whatever costs necessary. If tobacco use is declining it's more likely from a sense of health awareness than any taxes involved.

As for alcohol use...well, evidence suggests that no one really has a grip on that anyway.

Plenty of tax free counterfeit smokes to be imported from China these days.

[h90]

What the hell is a "sin" tax? Isn't the current views beyond such a thing? A "Sin tax" is nothing more than a TAX on any person who happens to engage in an activity that is 'socially or politically ' unacceptable... BUT still LEAGEL!

A sin tax only purpose is to make hypocrite happy......

Beside that it is very unsocial and unhealthy. The rich can have heir good glass of wine. The poor can only get the back market poisones lao kao.

[jaidam]

Overtaxing these goods is dangerous. Just look at the UK, 20 years ago folk were happy with a pint and a woodbine. Nowadays a few pints and ciggies will cost about 50 quid. Its far cheaper to blast yourself to oblivion with legal highs and no wonder violence is off the charts as well as numerous deaths. Education, promotion of moderate begaviour and legalize pot for a safe relaxation alternative. It really is not rocket science.

I notice in Thailand the rapid rise in popularity of 4x100 and it really does make the taker nasty. I would hazard a guess that if the consumer had access to a nice pint and reefer there would be no need to start eating strip light powder, mosquito coils, cough medecine, kratom extract and red bull concoction. Plus it tastes awful.

[h90]

Overtaxing these goods is dangerous. Just look at the UK, 20 years ago folk were happy with a pint and a woodbine. Nowadays a few pints and ciggies will cost about 50 quid. Its far cheaper to blast yourself to oblivion with legal highs and no wonder violence is off the charts as well as numerous deaths. Education, promotion of moderate begaviour and legalize pot for a safe relaxation alternative. It really is not rocket science.

I notice in Thailand the rapid rise in popularity of 4x100 and it really does make the taker nasty. I would hazard a guess that if the consumer had access to a nice pint and reefer there would be no need to start eating strip light powder, mosquito coils, cough medecine, kratom extract and red bull concoction. Plus it tastes awful.

In Austria as more restrictions they put for the young one as bigger the problems.....When you are allowed to drink with 14 but don't really like it you'll grow up responsible. If you are banned from Alcohol till 21, the chance that you get hold of a bottle lao kao with 17 and drink it hidden somewhere because it is hidden is a lot higher.

Beside Sin Tax? in my religion neither Alcohol not Cigarettes are a sin. Other members of religions who don't like it, should just abstane from these drugs but keep me alone with their sins.

[Emster23]

More hyperbole: "Attack"? I mean really..... how about "defending their business interests"? How about corruption as sin (theft), which is fairly universally seen as a "sin". Think of the cash that could flow in..... Oh wait, the collectors would be bribed and corrupted not to collect.....

[Thai at Heart]

Having a charity receive billions of baht with no financial oversight frankly appalling. Whoever thought it up, must be very smart.

[h90]

More hyperbole: "Attack"? I mean really..... how about "defending their business interests"? How about corruption as sin (theft), which is fairly universally seen as a "sin". Think of the cash that could flow in..... Oh wait, the collectors would be bribed and corrupted not to collect.....

How about putting a sin tax on being hypocrite or intolerant.....that would let some big money flow as well

[Ulic]

Of course they are. Those who want to increase the SIN tax should not in relation to the 300

baht minimum wage a local beer is much more expensive in Thailand than in developed

countries. I don't smoke so I cannot comment on the cost of cigarettes.

[fred Kubasa]

Why wouldn't those most affected by something inherently wrong, protest ? The authorities expensive efforts to lessen alcohol and cigarette consumption have failed and, some believe, increased, their usage !

[sammygood]

why call it a sin tax? just call it ... you cause it, you pay for it, tax

[DaiHard]

So what exactly have they achieved for the 4 billion/p.a they never had to account for?

[ksamuiguy]

Doesn't stop smoking, drinking, only take food off the table to pay for the additional tax.