The Excise Department is considering whether a single tax rate or weight-based levy should be applied for cigarettes, says director-general Ekniti Nitithanprapas.
At present, a two-tier system is applied for excise duties levied on cigarettes, which comprises a 25% tax on cigarette packs with a retail price of up to 72 baht 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 per cigarette, regardless of the retail price. This means that one pack is subject to a tax of 25 baht, as there are 20 cigarettes per pack.
He said the two-tier structure prompted cigarette manufacturers to avoid paying high tax rates by selling cigarettes for 72 baht or less per pack, triggering the 25% tax rate.
Mr Ekniti said if a single tax rate is chosen, it must strike a balance between farmers' income, public health, government revenue and efforts to prevent smuggling of foreign cigarette brands, which sell at low retail prices.
"The single rate should be between 25% and 42%. However, we need to study the impact of applying a single rate," he said.
Under the previous two-tier tax structure (which expired in September 2021), packs priced up to 60 baht were subject to 20% tax, while those more than 60 baht were subject to a 40% tax.
A flat tax rate of 40% was scheduled to be applied since October 2021, regardless of the retail price, but there was opposition from the tobacco authority and tobacco farmers because a single-tier rate would affect the income earned by both parties.
The cabinet ordered the Finance Ministry, led by the Excise Department, to study the cigarette tax structure for the medium and long term to determine an appropriate and fair single-tier rate, taking into account market competition as well as public health.
Moreover, the cabinet assigned the Tobacco Authority of Thailand to motivate tobacco farmers to switch to other crops for long-term health and environmental concerns, with technical assistance offered by the Thai Health Promotion Foundation.