MPs approve increase in tobacco tax

MPs approve increase in tobacco tax

Published: 18/05/2009 at 03:47 PM

The cost of local cigarettes will rise following the House of Representatives’ approval of an increase in the excise tax on tobacco products on Monday.

The  hike follows a large rise in the excise tax on alcoholic beverages, which is aleady hurting drinkers’ wallets, and precedes promised increases in fuel taxes.

The cabinet has opted to raise consumption taxes amid predictions that projected revenue for the 2010 fiscal year could fall by 200 billion baht at a time of boosted government expenditure to offset the impact of the global economic slump on the domestic economy.

The House on Monday approved an amendment to the Tobacco Product Control Act BE 2509 (AD 1966), by 245 votes to 33, with 13 votes to abstain. Eight MPs registered as present did not bother to vote at all.

Deputy Finance Minister Pruttichai Damrongrat explained the government’s need to raise extra revenue and hit tobacco by saying the government had the people’s best interests at heart. The extra tax would encourage people to smoke less. Cigarettes were bad for their health, he said.

Despite this, he expected the tax hike would increase government revenue by more than 30 billion baht in the coming financial year. The money would be used for development outside Bangkok, he said.

When promulgated, the excise tax will be raised by 90 per cent of the actual tobacco value, or about three baht per gramme.

Reports said this would raise the price of a packet of locally made cigarettes, now selling at about 50 to 70 baht a packet, by three to five baht, or 30 baht a carton.
 
The steep rise follows cabinet’s increase in the excise tax on alcoholic beverages, which pushed up the retail price of a can of beer by at least four baht.

The excise tax on oil and oil products is also set to rise, with predictions the price of gasohol could reach 30 baht a litre next month.

However, Energy Minister Wannarat Channukul said the increase will be softened, with the oil subsidy fund initially covering the fuel tax hike by about two baht a litre.

The subsidy would be eased when global oil prices fall, keeping the pump price constant, according to Mr Wannarat.