Excise Dept mulls single tax rate for cigarettes
The Excise Department is considering setting a single tax rate for cigarettes and is preparing to negotiate with the Public Health Ministry to include e-cigarettes under its jurisdiction for seizure and fines.
According to Ekniti Nitithanprapas, director general of the Excise Department, progress is being made in the consideration of a new cigarette tax structure. The department is now aligning its tax collection approach with the World Health Organisation's (WHO) recommendation, suggesting that taxes should be levied based on higher quantities and at a single rate.
Currently, the Excise Department employs two tax collection methods for cigarettes:
1. Tax based on quantity: 1.25 baht per cigarette pack.
2. Tax based on price, with two tiers: 42% for cigarette packs priced at 72 baht or more, and 25% for packs priced below 72 baht.
However, the dual-rate system has faced challenges, as manufacturers and importers have reduced prices to compete under the 25% tax rate. Preliminary studies indicate that a single-rate tax based on price would be more effective and would also allow the Excise Department to have jurisdiction over e-cigarettes.
Regarding e-cigarettes, the Excise Department is in discussions with the Ministry of Public Health to bring them under its regulatory framework. This move is aimed at preventing the proliferation of unregulated e-cigarettes in the market. Currently, the absence of a designated tax bracket for e-cigarettes limits the department's authority to seize them and impose fines on the distributors.
While higher cigarette taxes have led to a reduction in smoking, they have also inadvertently led to increased consumption of counterfeit and e-cigarettes, Ekniti noted. This has placed a heavier burden on the Excise Department's efforts to combat illegal activities.
To address these challenges, the Excise Department plans to enhance its data analytics capabilities in collaboration with the central police force. An official agreement is set to be signed on August 31 formalising this collaboration.
Additionally, the department has partnered with a private 'big data’ organisation under the Ministry of Digital Economy and Society to enhance the efficiency of law enforcement by bolstering data related to illicit trade. This initiative will be tested using the cigarette trade as a sandbox project in its initial stages.
The development of the online illegal trade enforcement centre has resulted in a 26% improvement in enforcement efforts compared to the same period of the previous year. Notably, the online enforcement centre has been most effective in combating counterfeit oil, with 1,135 cases and fines totalling 23 million baht in the first 9 months of 2023, a significant increase from 578 cases and 2 million baht in fines during the same period in 2022. Similarly, fines related to illicit tobacco trade have increased by 20% to 5.7 million baht from 4.1 million baht in the corresponding period of 2021.
