Prakit: Tax tobacco, not just cigarettes

Thailand should gradually increase excise tax on tobacco as part of efforts to reduce the number of smokers, because taxes on cigarettes are not working, according to Prakit Vathesatogkit, a prominent tobacco control advocate.

He said the inappropriate tax structure between cigarette and tobacco was the weakest factor in the country's failed efforts to reduce the number of smokers.

The low tax charged on tobacco resulted in price difference between cigarettes and tobacco. Therefore, whenever the government raises the tax on cigarettes, many smokers turn to smoking tobacco, which is much cheaper, and roll their own.

A recent survey concluded that smokers spend on average 586 baht a month buying cigarettes produced by manufacturers, but smokers who roll their own tobacco spend only 37.5 baht a month on average.

 "This is a major factor in the failure over the past two decades of efforts  to reduce the number of smokers,  who now total around 13 million, and about half of them roll their own tobacco," said Dr Prakit, who is an adviser to  the Bureau of Tobacco Control under the Department of Disease Control.

The government's latest hike in the tax on cigarettes in August result in imported cigarettes increasing in price by 9-10 baht per pack of 20, and 5-6 baht for local brands. Imported brands start around 90 baht a pack while Thai brands range between 37-85 baht a pack.

The government has raised the excise on tobacco to one satang for every gramme of tobacco. It also raised  the tax on cigarettes to 87% of value plus one baht per gramme of the cigarette.

However, the new rate is still lower than the ceiling set at 90% of value and three baht per a gramme per cigarette.

In 2011, excise on tobacco and alcohol products generated 57 billion in revenue  based on a single-tier or unitary tax structure.

Dr Prakit last week attended the Fifth Session of the Conference of Parties to the WHO Framework Convention on Tobacco Control in Seoul, South Korea.

He said the 176 members agreed to set a guideline to apply tax and price measures for tobacco control purposes under the principle that an effective tax system will help reduce smoking as well as help prevent addiction among young people.

It was agreed all members should maximise the effectiveness of tax collection on tobacco, partly to prevent the tobacco industry intervening in tobacco tax policy.

It was also proposed at the conference that tobacco tax should be increased in line with the rise in people's  income, or inflation.

The conference debated widely on the allocation of tax to support tobacco control activities. The European Union and China opposed the issue but they finally had to agree with the majority of participants to adopt this principle, Dr Prakit said.

The Thai Tobacco Trade Association has, meanwhile, urged the government to amend the Tobacco Control Bill drafted by the Public Health Ministry, arguing it would have a severe impact on the estimated 482,000 retailers of tobacco nationwide.

The association's survey indicated that 78% of these traders would be hurt by the legislation, which could reduce their incomes by  as much as 12.6%.

The traders argued the bill would increase their financial burden and restrict their right and freedom to do business, while at the same time there was nothing to guarantee that such new regulations would help reduce tobacco consumption.

Related search: tobacco, cigarettes, tax

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