Smokers' shift to hike tax on loose tobacco

Excise hints at levy on e-cigarettes

The Excise Department plans to increase the tax on loose tobacco after several smokers changed to hand-rolled cigarettes because of the cheaper price.

The Excise Department is going to raise the tobacco tax after dozens of smokers have switched to hand-rolled cigarettes, prices for which are far cheaper than factory-made cigarettes following enforcement of a new excise tax structure last year.

Loose tobacco now costs 5-30 baht per pouch, well below the price of cigarettes at 60-100 baht per pack, said Patchara Anuntasilpa, director-general of the Excise Department.

The retail price gap will widen from Jan 1, 2019, after a 40% tax is applied across the board, he said.

With the change in excise tax structure, cigarettes are liable to be taxed both in terms of volume and value, regardless of price. The levy in terms of volume was raised to 1.20 baht per cigarette from 1.10, while the tax based on value was divided into two rates: 20% of suggested retail price for cigarettes priced below 60 baht per pack and 40% for those priced more than 60 baht. In two years, the excise tax for cigarette packs priced 60 baht or lower will be raised to 40% -- the same rate applied to packs priced above 60 baht.

For tobacco, it is taxed 0.005 baht per gramme. Mr Patchara said the low rate tax for loose tobacco is because it is considered mostly a product for the poor.

"After the new excise tax structure came into force, some smokers shifted from cigarettes to loose tobacco because it is cheaper, so it is necessary to even out the levies," he said.

Even though the new tax will raise the retail cigarette price, the department plans to impose the new rate as scheduled, said Mr Patchara.

He said the department also wants to supervise the standards for some products unregulated by authorities, prohibiting manufacturers from adding toxic ingredients. These products comprise cigarettes, loose tobacco, liquor and beer, with one example banning liquor producers from adding methyl alcohol.

The department has a mandate to supervise these products' standards and it is setting up a unit to take charge of the issue, said Mr Patchara.

He said the department stands ready to impose a tax on vaping if the Commerce and Public Health ministries can agree on product imports.

Importing and distributing e-cigarettes remains illegal in Thailand, though several countries such as Japan, South Korea, the UK, and some states in the US do not ban vaping.

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