Thailand: Lower Tobacco Levy To Help Out Farmers

Source from:  Bangkok Post 08/12/2019

The Finance Ministry is planning to propose cutting the tobacco excise tax by one-fourth to lessen the impact on farmers after the previous government hiked the tax from 0.5 satang to 10 satang per gramme.

The proposed tax cut calls for the new levy to be 5-6 times higher than the 0.5-satang mark but lower than the current rate, said Santi Prompat, a deputy finance minister.

After the previous administration raised the tobacco tax, 20,000 farmers felt the pinch, he said.

Although the tobacco tax is an insignificant portion of the government's tax revenue, revoking the levy is unlikely because Thailand is committed to protecting people from secondhand smoke under international health regulations, Mr Santi said. The ministry is trying to help tobacco farmers by cutting the tax.

The prior government approved hiking the excise tax on tobacco to 10 satang per gramme from 0.5 satang to narrow the retail price gap between factory-made and hand-rolled cigarettes after many smokers switched to hand-rolled. The prices for hand-rolled are far cheaper than for factory-made cigarettes after a new excise tax structure took effect in September 2017.

With the change in tax structure, cigarettes are liable to be taxed both in terms of volume and value, regardless of price. The levy for volume was raised to 1.20 baht per cigarette from 1.10, while the tax based on value was divided into two rates: 20% of the suggested retail price for cigarettes priced at 60 baht or lower per pack, and 40% for those priced above 60 baht.

Starting from Oct 1, 2019, the excise tax for cigarette packs priced at 60 baht or lower will be raised to 40% -- the same rate applied to packs priced above 60 baht.  Enditem