Liquor tax exemption may harm health but not stimulate tourism: researchers

The proposed exemption, discussed by the Thai cabinet this week as part of an economic stimulus package, would prove ineffective at increasing tourism, according to researchers at the Thailand Development Research Institute (TDRI) including Dr Narit Pisalyabutr.

Reducing excise taxes would go against the principle of utilising taxes to care for society.

The government’s economic stimulus package is to focus on boosting tourism centres and adjusting the structure of excise taxes. Local liquor tax was exempted from this scheme.

Lamentable commodity

Dr Narit, a senior scholar at the TDRI, views liquor as a lamentable commodity, causing adverse effects on health and society. The imposition of excise taxes aims to reduce consumption, with the revenues utilised to address various social issues arising from prolonged alcohol consumption, such as campaigns against drunk driving and allocating funds for patients affected by alcohol-related illnesses.

“There is not much agreement with reducing or exempting excise taxes, because it contradicts the principle of using taxes to care for the aforementioned society”, he said.

When asked about the rationale behind exempting excise taxes for local liquor in order to stimulate domestic tourism and the Thai economy, Dr Narit noted that the direct effect would be on prices. Reducing excise taxes might lower alcohol prices, possibly leading to increased consumption. He said an excise tax reduction would not correlate with indirect effects on tourism, contrary to the Cabinet’s intent.

The direct impact might not be substantial, since alcoholic beverages require a thorough study of their societal and health implications, he conceded.

Determining an appropriate tax rate is crucial. If the tax is too low, it will negatively impact society as a whole.

To stimulate the tourism sector, the focus should be on enhancing service quality, particularly in addressing the serious issue of alcohol-related tourism problems, he said. This approach should be diverse, maximising benefits for local communities, according to Narit.

Instead of reducing alcohol taxes, government could focus on stimulating tourism through quality improvement, such as hosting renowned events in various regions throughout different months and promoting recurring events such as Europe’s Christmas Markets.

However, the focus should remain on diversification and maximising community benefits, Narit said.

Global health organisations report that approximately 3 million people die annually worldwide due to alcohol-related issues, causing over 230 different diseases.

Meanwhile, Thai alcohol consumption trends among current drinkers have steadily increased over the past decade, as found by 2022 research into Thai drinking behavior.

Furthermore, Thailand’s National Statistical Office survey in 2021 discovered a high prevalence of new alcohol consumers among Thai youths, reaching to 30.8% in the 15-19 age group and 53.3% in the 20-24 age group.

The significant factors contributing to increased consumption are online social media advertising, especially through diverse influencers, and various events such as sports competitions, concerts, and music festivals promoting alcohol consumption. These challenging-to-regulate alcohol marketing strategies have become a misguided norm, influencing children and adolescents, researchers conclude.

In 2021, the expenditure for alcohol consumption had increased nearly two-fold compared to 2018. Heavy drinkers regularly spending an average of 3,722 baht per month on alcohol, significantly higher than the average minimum wage of 340 baht per day.