Dr. Roengrudee Patanavanich, an academic at Mahidol University’s Faculty of Medicine, said Thailand’s Excise Department is considering a new tax structure for cigarettes to replace the current system, which has been in effect for almost four years. At present, a two-tier system is applied to excise duties levied on cigarettes, which comprises a 25% tax on cigarette packs with a retail price of up to 72 baht ($2.16) to ease the burden on low-income earners, and 42% for packs priced higher than 72 baht. Packs are also subject to an additional tax of 1.25 baht (3.8 cents) per cigarette, regardless of the retail price.
Academics say the tiered system has neither curbed illegal cigarettes, increased state revenue, nor prevented new smokers, and are calling on the government to restructure it to a single excise tax rate as recommended by the World Health Organization (WHO).
Roengrudee said under the previous non-tiered system, government tax revenue increased from 13.6 billion ($408 million) in 1990 to 68.6 billion ($2 billion) in 2017 even as smoking rates declined 12%. She said revenue rates have dropped steadily since the tiered system was introduced in 2017, including a 15-year low of 51.24 billion ($1.5 billion) last year
“Since the two-tiered tax system was introduced in 2017, the smoking rate has not fallen, while the Finance Ministry has failed to achieve its goal of collecting 60 billion baht ($1.8 billion) in cigarette tax annually,” Roengrudee said. “The problem of illicit cigarettes also remains unsolved. The WHO presented an analysis of the cigarette tax between 2018 and 2019 to the Excise Department. The WHO suggested Thailand should adopt a single tax rate of 40% and impose an additional tax of 1.25 baht per cigarette.”
Dr Prakit Vathesatogkit, executive secretary of the Action on Smoking and Health Foundation, spoke out against the Thailand’s Authority of Tobacco’s proposal to change to a three-tiered tax structure. He said that would be a retrograde step, as other countries are shifting to a single-tax rate in line with the WHO Framework Convention on Tobacco Control. With the proposed three-tiered structure, the price of cigarettes produced by the TAOT would fall, not different from the prices of illicit cigarettes that avoid taxes, Dr Prakit said, adding this will also lead to cheaper cigarettes being imported from foreign producers to compete with the TAOT’s cigarettes.
“To tackle cigarette tax avoidance, the government must tighten controls on illicit cigarettes instead of reducing taxes or using multiple-tiered tax systems. Cheaper prices will prompt more people to smoke,” Prakit said.
