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Thai Cabinet give green light to new alcohol, cigarette tax rates

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Cabinet give green light to new alcohol, cigarette tax rates

 

BANGKOK, 13 September 2017 (NNT) - The Cabinet meeting on Tuesday approved the new excise tax rates for alcohol, cigarettes and playing cards. The new tax rates will be published in the Royal Gazette before they become effective on 16 September 2017. 

Government Spokesman Lt.Gen.Sansern Kaewkamnerd said th new tax rates were proposed by the Excise Department. Recommended retail prices of alcohol, cigarettes and playing cards will be used as a base for excise tax computation. 

The spokesman said Prime Minister Prayut Chan-o-cha stressed that relevant government units should clarify the new excise tax structure to the public. He confirmed that the new tax rates will not significantly affect the tax burden of entrepreneurs and, therefore, stockpiling will be unlikely.

 
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-- nnt 2017-09-13

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I am not sure what the logic is behind basing the excise tax rate on the "recommended retail price."

 

When I buy a bottle of beer for, say, 55 baht, I assume that these 55 baht include A) the price of the product off factory, B) the wholesaler's profit, C) the retailer's profit,  and D) excise and other taxes.

 

How will a retail shop figure out for how much they should sell the bottle of beer if the excise tax is calculated on the retail price, i.e. the price passed on to the end consumer?

 

When a shop keeper receives their merchandise from the wholesaler, there supposedly is no excise tax on it yet. Then the retailer adds their profit margin, which results in the retail price BEFORE excise tax. Then they have to add to this the excise tax based on the calculated retail price - which would of course automatically push up the actual retail price, which in turn would necessitate another excise tax adjustment as the retail price is now higher. So how is this rather bizarre taxation structuring supposed to "NOT significantly affect the tax burden of entrepreneurs"?

 

Or am I missing something? Do they perhaps not mean "recommended retail price" but "off-factory price" or "wholesaler price"? Because everything else wouldn't make any sense. Who thinks out schemes like that? Idiots?

 

And in any case, why do we seem to have excise tax increases every other year now? Oh, I forgot, of course this apparently cash-strapped government desperately needs a couple of useless submarines... 

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2 hours ago, webfact said:

Recommended retail prices of alcohol, cigarettes and playing cards will be used as a base for excise tax computation. 

So if I understand correctly this new law it is a tax collected at the wholesale level based on "recommended" retail prices. Who could dream up such a bizarre method of tax calculation and collection.

Would then these tax rates  be calculated on the RRP of booze and cigarettes at the Mandarin Oriental Hotel or are they based on the prices at the mum and dad corner store or at some retail outlet anywhere in between. And who decides what the arbitrary retail prices will be for all points-of-sale throughout Thailand? Transportation has an impact on retail prices.

This tax change appears to have all the makings of a typical military flawed law created by a buffet lunch committee of head nodding financially naive generals.

The incompetence of the Thai military can usually be relied upon to turn something simple into an administrative horror show. Predictably it will be wide open to rorting at wholesale level and rip-offs at the retail level.

Should be good for a few laughs and tears when it swings into action.

 

 

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11 minutes ago, StefanBBK said:

very simple. trust producers will recommend very low retail prices. that keeps the tax low.

Sent from my SM-G950F using Thailand Forum - Thaivisa mobile app
 

But this could be a disaster for imported products, the RRP of which will already have the excessive import tax included. 

 

Let's wait and see!

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3 hours ago, webfact said:

tax rates will not significantly affect the tax burden of entrepreneurs

Entrepreneurs?  Thought two well established families man most of all alcohol sales in Thailand.  These are corporations who are protected by the Hi-So syndicate and the beloved leader.  There is nothing entrepreneurial about alcohol sales in Thailand. 

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Plus they get another 7% VAT based on the difference between buying & selling.

Its enough to drive a man to drink

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1 hour ago, yellowboat said:

Entrepreneurs?  Thought two well established families man most of all alcohol sales in Thailand.  These are corporations who are protected by the Hi-So syndicate and the beloved leader.  There is nothing entrepreneurial about alcohol sales in Thailand. 

Amen brother !

 

Even follow this down a few levels to regional and intra town supply. You can't break it at this level either as they have you locked out and forced to obey the party line. Try to go around them and not only cannot you get supply but you risk violence and worse.

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Here we go again. Excise up by x percent but the price across the counter will be the retail price plus x percent.

Thais and mathematics is an oxymoron!

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15 minutes ago, SGD said:

Amen brother !

 

Even follow this down a few levels to regional and intra town supply. You can't break it at this level either as they have you locked out and forced to obey the party line. Try to go around them and not only cannot you get supply but you risk violence and worse.

Violence or worse.  The spirit of Al Capone and 1930's Chicago lives on in parts of LoS. 

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The normal way it is done in most western countries.

The government puts the tax up on a certain product, say 5%.

This normally happens in a few ways.

If the product is imported into the country customs will increase the duty by 5%

Then the importer has it cleared by their customs agent. The importer will pay the customs

invoice charges which include the import duty, VAT or GST, and normal customs department charges.

The Importer then sells it to their customers including the added tax increase.

Then the retailer buys it from the importers customer who charges his new cost price and adds his normal mark-up plus

GST /VAT. Then the retailer pays the government GST/VAT department the country's GST/VAT tax.    

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Well, the tax increase will have zero impact as restaurateurs are no longer allowed to even mention alcohol anywhere. Beer coolers cannot be used and wines carry labels which are forbidden too.

This country is back-pedaling in superdrive back to the 14th century.

Guess the funny phone calls will happen again where Thai men offer me (a restauranteur) some special deals on wines "cheap", "cheap". Well, if you can operate without those beautiful tax and excise stickers on bottles - fine; I never took the risk as a colleague was shafted by the under-cover policemen with a contribution to the coffee till of only THB 50K. 

Next will be the minimum wage increase to THB 400 - de facto doubling the minimum salary over six years. A well earned achievement considering the double efficiency of staff rewarding us all for this increase ;-). 

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SIN Taxes Take A Hike Saturday

By Asaree Thaitrakulpanich, Staff Reporter

 

OR-WINE6-696x464.jpg

Customers drink wine in June at a Bangkok restaurant.

 

BANGKOK — Cigarettes will be more expensive and the price of booze will rise or tumble under new sin tax rules which will take effect Saturday.

 

While cigarette prices are expected to rise by an average of 30 baht per standard pack, the rewritten code fundamentally changes how taxes on alcohol are assessed and collected.

 

Full Story: http://www.khaosodenglish.com/news/business/2017/09/13/sin-taxes-take-hike-saturday/

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Back in 1982 I used to but a cold bottle of beer in a bar on the beach in Cebu for 1 (one !) Baht, clearly illustrating that the basic cost of producing beer is incredibly small. Therefore the major part of the prices now being paid in Thailand must be tax. Unfortunately beer is one of the substances that fall under the category of "inelastic demand", meaning that when you gotta have a beer you,ve gotta have a beer, whatever the price asked. As the saying goes, when you have them by the gonads, the hearts and minds will follow !

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