Talks to broach cigarette tax

Talks to broach cigarette tax

Revenue fell under two-tier system

Deputy Finance Minister Santi Prompat says he will discuss with Finance Minister Arkhom Termpittayapaisith the new excise tax structure for cigarettes, which is under review, before proposing it for the cabinet's consideration next month.

A new flat tax rate of 40% was scheduled to be applied since October 2019, regardless of the retail price, but there has been opposition from some related parties.

This prompted the ministry to put off its enforcement until Sept 30 this year in order to review the tax.

At present, a two-tier system is applied for excise duties levied on cigarettes. A 20% tax rate is applied to the retail price for packs costing up to 60 baht. If the retail price exceeds 60 baht per pack, a 40% tax rate is applied.

Mr Santi said he reviewed the tax details and reached a conclusion, which requires approval from the minister. He declined to disclose his conclusion.

Excise Department director-general Lavaron Sangsnit said the new structure will be based on four principles that aim to strike a balance between farmers' income, public health, government revenue and efforts to prevent smuggling.

He said the new structure is designed to discourage people from smoking and simultaneously thwart the smuggling of foreign cigarettes, which avoid the payment of duties.

A ministry source who requested anonymity said since the adoption of the two-tier cigarette tax structure in 2017, the department's excise revenue from cigarettes fell from 68.6 billion baht in fiscal 2017 to 68.5 billion in 2018, 67.4 billion in 2019 and 62.9 billion in 2020.

The department collected cigarette tax of 37.8 billion baht during the first seven months of fiscal 2021.

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