Ministries are clamping down on the hoarding of alcoholic beverages and cigarettes ahead of Saturday, when their prices would be higher.
The new excise tax law, which comes into effect on Sept 16, introduces a new structure and calculation methods that would see the so-called sin taxes increase substantially. The law combined the existing seven excise tax laws on alcohol beverages, tabacco and playing cards.
While the details have not been announced, it is speculated the prices would be much higher and there have been reports several vendors are refusing to sell the products.
The commerce and finance ministries are coordinating to take action against such vendors, Deputy Commerce Minister Sontirat Sontijirawong said on Thursday.
Internal trade officials have been sent to check the market and take action against hoarders. The penalties are seven-year imprisonment and/or a fine not more than 140,000 baht.
Although alcohol beverages and cigarettes are not on the ministry’s price control list, it is illegal to hoard and refuse to sell the products, he said.
The new law introduces a new calculation method of the so-called sin taxes, including those on sugary drinks, tea and coffee. Taxes are calculated based on suggested retail prices and on volumes.
For cigarettes, the tax base will be based on retail prices and volumes from ex-factory prices now.
Earlier, it was speculated cigarette prices would be 1.50 baht apiece higher, or 30 baht more a packet, but authorities later ruled it out as an exaggeration.
The latest reports indicate the cigarette prices would be 1.20 baht apiece higher, or 24 baht a packet. While the tax on prices increases, the tax on volume will be cut to temper the price increases for the first two years. In subsequent years, the tax rate will gradually go up to reach the ceiling allowed by law.
Authorities have reasoned the sin tax hikes are an effort to promote good health and part of the tax reform aimed at minimising the use of discretion by tax officials and therefore bribery and corruption.
In addition to the excise tax, sin-tax payers are required to pay "earmarked taxes" to three agencies set up for social benefits to finance their operations -- the equivalent of 2% of all sin tax collections to the Thai Health Promotion Foundation, 1.5% to state-owned TV operator Thai PBS and 2% to the National Sports Development Fund. However, the latter two may receive up to 2 billion baht each year, with the excess going to state coffers.
The cabinet also recently approved the yet-to-be-set-up Elderly Fund as another beneficiary of the earmarked tax, at 2% of the sin tax collections but not more than 4 billion baht a year.