Thailand tax increases hit imported wines

Thailand has increased excise taxes on alcoholic beverages and cigarettes by an average of 2%, which the government has said will help it to generate an additional 12 billion baht (US$360 million) worth of tax revenue, with increases on imported wines the sharpest.

Bangkok from at Benjakiti Park.

The new taxes, also known as “sin taxes” levied on goods that are deemed harmful to health by the Thai government, are part of the Excise Tax Act 2017, which came into effect on 16 September, reported Bangkok Post.

Different from previous excise tax, the new tax rate takes into account both value and quantity. Based on the new tax rates on liquors, 45% will be collected based on a products value, and 55% from the degree of alcohol in compliance with the World Health Organization (WHO) and the Public Health Ministry, said the country’s director general of the Excise Department, Somchai Poolsavasdi at a press conference. (see table below)

In addition, the new excise system is based on retail price, while the previous system was based on ex-factory or CIF (cost, insurance and freight) prices, added Poolsavasdi, wrote The Nation.

Thailand, a Buddhist majority country, already has a set of punitive taxes on alcoholic beverages, with taxes on French and American wines, for instance, as high as nearly 400% including excise tax, municipal tax, health tax and import tariff.

With the introduction of the new excise act, tax on imported wines priced above 1,000 baht a bottle will rise by at least 110 baht, the highest jump among beers, spirits and soft drinks, while tax on locally produced domestic wines will drop by 25 baht, according to the new rule.

Taxes on beer also spiked with canned beer seeing a 0.50 baht increase and at least 2.66 baht hike for bottled beer. For higher priced beer, tax will decrease by between 0.99 baht and 2 baht.

In the spirits category, tax for white spirits will be increase between 0.84 baht and 3.49 baht. For other kinds of locally produced spirits with alcohol strength of 28% ABV, the additional tax will be 8 baht per bottle and 30 baht for spirits with 40% ABV.

The tax on other imported spirits, such as Johnnie Walker Red and Blue Label Scotch whisky, will be a little less, from 3 baht to 26 baht depending on alcohol content, according to the new tax rate.

“In the future, the tax will increase based on alcohol content, with high levels of alcohol subject to higher taxes,” Poolsavasdi was quoted as saying.

Traditionally, Thailand still drinks more whisky and beer than wine, with only less than 1% of alcohol consumed in the country being wine, according to a WHO report.

Of the 12 billion baht expected to be brought in from the new tax regime, five billion baht is expected to come from beer, 2.5 billion from sweetened beverages, 2.1 billion baht from cigarettes and 2.2 billion baht from cars, the official explained.

Photo source: Bangkok Post