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Liquor and tobacco valuations reviewed
CHATRUDEE THEPARAT & WORANUJ MANEERUNGSEE
Cigarette and liquor prices are expected to rise once new measures for calculating excise taxes take effect.
The cabinet yesterday approved draft amendments of four acts _ the Liquor Act, Excise Tax Act, Excise Tariff Act and Tobacco Act _ under which ex-factory prices would be clarified to make it easier for calculating taxes.
A review was needed given that ex-factory prices had been left unchanged for over a decade, resulting in discrepancies with actual market prices, said Suparat Nakboonnam, a deputy government spokeswoman.
The review would not only check whether manufacturers' self-declared ex-factory prices were accurate, but also if there were big gaps with retail prices, indicating possible profiteering or tax evasion.
Ms Suparat said the cabinet also approved criteria for declaring the value of products in case their prices were not compatible with market mechanisms or failed to reflect actual costs.
The prices announced by excise authorities would be based on costs or deductions from previous wholesale prices or deductions from retail prices on production in normal markets.
Other methods could be used to assess products imported for use in free-tax zone or export areas, but found to have been used for other purposes than exports.
The four drafts received first-hearing approval from National Legislative Assembly (NLA) members in the previous military-appointed government.
Tax rates for liquor are based on an ad valorem or specific rate, whichever is higher. An ad valorem tax generally means a tax collected on the value of goods or services.The ad valorem tax for fermented liquor would increase to 90% (of the value of the products) from 60%, with tax for distilled liquor such as white spirits and blended liquor to increase to 90% from 50%.
Taxes on tobacco, currently levied at 80%, would be raised to 90% if the new legislation takes effect.
Wimonwan Udomphorn, the vice-president of the spirits distributor Diageo, said that raising excise taxes would not discourage drinking. Instead, she said, it would simply widen the price gap between liquor in the Thai market and neighbouring countries, which was quite wide already, and could lead to whisky smuggling.
She reiterated the industry's view that the government should collect excise tax based on alcohol content percentage. That would encourage beverage makers to reduce alcohol content.
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