Cigarette prices set to rise on new excise tax

Cigarette prices set to rise on new excise tax

The new excise tax structure for cigarettes is expected to result in a higher retail price for low-priced products of at least 6 baht per pack, says the Excise Department's director-general Lavaron Sangsnit.

The new two-tier tax structure, which was approved by the cabinet on Tuesday this week, took effect on Oct 1.

The structure applies 25% tax on cigarette packs with a retail price of up to 72 baht, 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 one pack is subject to a tax of 25 baht, given there are 20 cigarettes per pack.

Mr Lavaron expects the makers of low-cost cigarettes will raise their retail prices to a range of 66-72 baht per pack from the current 60 baht, depending on their costs and market competition.

Under the previous two-tier tax structure, packs priced up to 60 baht were subject to 20% tax, while those more than 60 baht were subject to 40% tax.

Packs were also subject to additional tax of 1.20 baht per cigarette.

He said the new tax is expected to generate additional tax revenue of 3.5 billion baht per year for the department, on top of its existing cigarette excise revenue of around 62 billion baht per year.

The Finance Ministry had planned to apply a new flat tax rate of 40% since October 2019, regardless of the retail price, but there was opposition to this plan from several parties.

This prompted the ministry to put off its enforcement until Sept 30 this year to review the tax, before the new structure was approved by the cabinet on Tuesday.

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