The Excise Department is set to cap the levy on sugary drinks at 20%, with beverages containing more sugar carrying a larger tax burden than less-sweet products, according to the department's chief.
The 20% ceiling is based on the current tax on drinks that have sugar among the listed ingredients, such as carbonated beverages, which are now charged 20% of the final wholesale price or 45 satang per 440 cubic centimetres, said director-general Somchai Poolsavasdi.
To encourage drinks makers to lower the sugar content of their products, high-sugar drinks could be imposed at the maximum rate, while those with less sugar will be taxed at lower rates such as 15%, 10%, 5% or even given a tax exemption, Mr Somchai said.
After the new tax on sugary drinks is enforced, all drinks which are now tax-exempt should be taxed for fairness to all beverage makers, he said.
The Excise Department is looking into imposing the sugary-drink tax on canned green tea and coffee.
Ready-to-drink green tea and coffee have been exempted from excise tax by claiming to use domestic raw materials, while fruit and vegetable drinks must contain at least 10% natural ingredients to escape an excise tax of 20% on the final wholesale price.
Mr Somchai said the Excise Department will allow a two-year preparation period after the tax is announced for sugary-drink makers to adjust, as officials consider the makers' request for five years too long.
The taxation is aimed at improving public health, but it needs to be cautiously considered as sources of sweetness added to drinks are derived from either natural or artificial sweeteners, which could have different impacts on health, Mr Somchai said.
The new sugary-drink tax is subject to the cabinet's approval.
Mr Somchai said the recommended retail price, which will replace costs, insurance and freight (CIF) values and ex-factory prices as a base for the excise tax computation, must be the price manufacturers calculate based on production costs plus management fees and standard profit, and must not be lower than prices paid by the final consumer in the normal course of business without value added tax (VAT).
The recommended retail prices have been designed to create fairness for all carmakers, as some manufacturers and importers have used loopholes to understate the value of CIF and ex-factory prices in order to reduce their tax burden.
The new excise tax law, which is pending publication in the Royal Gazette after winning National Legislative Assembly approval, will come into effect 180 days after publication.
The Excise Department is drafting 78 issues of rules, regulations and announcements to be subordinate laws.
For excise tax collection, the department gathered 130 billion baht for the four months to January, falling short of its target by 2 billion.
Mr Somchai is optimistic that the department's tax collection target of 555 billion baht for this fiscal year is still reachable because the country's economic recovery and the lapse of the five-year lock-up period for cars bought under the first-time buyer scheme are expected to help increase domestic car sales to 800,000 units as targeted and boost excise tax revenue.
One of the country's biggest non-alcoholic drinks makers, Oishi Group, said it was ready to comply with the law, adding that all its products will face the new excise tax rule.