Controversy surrounds proposed multilevel tax framework for cigarettes
Critics slam the existing tax structure on smokes in Thailand, urging a shift to a single excise tax rate as advocated by the World Health Organization (WHO). They argue that the current tiered tax system has failed to suppress the illicit cig market and averted new smokers.
Dr Roengrudee Patanavanich, an academic from Mahidol University's Faculty of Medicine, voiced concerns over the declining tax revenue since the introduction of the two-tiered tax system in 2017. Before the tiered system, cigarette tax revenue steadily increased from 13.6 billion baht in 1990 to 68.6 billion in 2017. However, during this period, the country's smoking rate dropped from 31% to 19.1%.
Dr Roengrudee attributes the revenue decline to the two-tiered system, with a 25% tax on packs up to 72 baht and 42% for packs priced higher. Adding an additional tax of 1.25 baht per cigarette regardless of retail price, results in a 25 baht tax per pack (with 20 cigarettes per pack). However, this has not prevented a drop in revenue, with it falling from 64.2 billion baht in 2021 to 51.24 billion baht the next year.
The WHO has proposed a single tax rate of 40% and an additional tax of 1.25 baht per cigarette, arguing that multiple tax rates will not increase Tobacco Authority of Thailand (TAOT) revenue but will benefit foreign cigarette companies, leading consumers to opt for cheaper cigarettes. Dr Prakit Vathesatogkit, executive secretary of the Action on Smoking and Health Foundation, concurs with the WHO recommendation and discourages the TAOT's proposal for a three-tiered tax structure, stating that it would be counterproductive and hinder efforts to curb illicit cigarette sales. Instead, enhancing controls on illicit cigarettes and maintaining tax parity with cheaper foreign cigarettes are deemed crucial in discouraging smoking.
Dr Roengrudee Patanavanich suggests that the decline in tax revenue since the implementation of the two-tiered tax system in 2017 could be addressed by adopting a single tax rate as recommended by the World Health Organization (WHO). This health and wellness expert believes that such a change would not only help in suppressing the illicit cigarette market but also ensure revenue for the Tobacco Authority of Thailand (TAOT), and contribute to the prevention and management of medical-conditions associated with smoking. Additionally, Dr Prakit Vathesatogkit supports the WHO's recommendation and advocates maintaining tax parity with cheaper foreign cigarettes as a key strategy in promoting health-and-wellness and curbing smoking.
