Taxation Strategy Taxation Strategy to Reduce to Reduce

Overall Alcohol Beverage and Overall Alcohol Beverage and Contaminated Liquor Contaminated Liquor

ConsumptionConsumption

Dr.Bundit SornpaisarnDr.Bundit SornpaisarnCenter for Alcohol Studies (CAS) Center for Alcohol Studies (CAS)

July 13th, 2005July 13th, 2005

ปรมาณจำาหนายสราในประเทศปรมาณจำาหนายสราในประเทศ

สถานการณการบรโภคแอลกอฮอลของสงคมไทย แนวโนมการบรโภคแอลกลอฮอลพ.ศ. 2524 - 2543

0

5

10

15

20

ปพ.ศ.

แอลกอฮอลลบรสทธตอคนตอป(ลตร)

ไทย

ฝรงเศส

เยอรมน

องกฤษ

สหรฐอเมรกา

ญปน

ฟลปปนน• ปรบเปนปรมาณแอลกอฮอลลบรสทธโดยประมาณ เบยร ไวน และสรากลนม แอลกอฮอลลบรสทธเทากบ 45 14. %, % และ 42% ตามลำาดบ• จากฐานขอมล WHO-alcohol consumption database

อนดบการบรโภคเครองดมแอลกอฮอลอนดบการบรโภคเครองดมแอลกอฮอลของประเทศไทยของประเทศไทย

30

8 5

9693

58

141

127

111

5 3 3

020406080

100120140160

อนดบท

Total Beer Wine Spiritsประเภทเครองดม

1998ป1999ป 2000ป

Figure 1 : Injury and mortality rate (per 100,000 populations) Figure 1 : Injury and mortality rate (per 100,000 populations) between 1984 and 2001between 1984 and 2001

Figure 2 :Liver disease and cirrhosis mortality rate and Figure 2 :Liver disease and cirrhosis mortality rate and per capita consumption between 1977 and 2001per capita consumption between 1977 and 2001

Figure3 : Thai consumption per capita of pure commercial Figure3 : Thai consumption per capita of pure commercial alcohol (for over 15s) and GDP per capita (1961 – 2000)alcohol (for over 15s) and GDP per capita (1961 – 2000)

IssuesIssues Objective of Raising TaxObjective of Raising Tax

Decrease Alcohol Consumption Decrease Alcohol Consumption or or Increase GovernIncrease Government Income or Bothment Income or Both

Important PrinciplesImportant Principles The Alcoholic Beverages’ Price should be relatively lower all The Alcoholic Beverages’ Price should be relatively lower all

No any beverages’ price decreasedNo any beverages’ price decreased Low Price Alcoholic Beverages should be increasedLow Price Alcoholic Beverages should be increased

Thailand Taxation System Thailand Taxation System on Alcoholon Alcohol

Thailand’s Thailand’s Taxation Taxation

on Alcohol on Alcohol

• Customs Duty [60%, 5%]Customs Duty [60%, 5%]• Excise TaxExcise Tax [Specific, Ad Valo [Specific, Ad Valo

rem Rate]rem Rate]• Local Tax [10%ET]Local Tax [10%ET]• Health Tax [2%ET]Health Tax [2%ET] • Value Added Tax [7%]Value Added Tax [7%]

C.I.F.Cost of Product +Production

Profit

Customs Duty

Excise Tax

Excise Tax

Lo cal

Lo cal

Heal th

Heal th

VATVAT

Alcohol Taxation in Thailand Alcohol Taxation in Thailand based on the Liquor Act B.E.2493 (A.C. 1950)based on the Liquor Act B.E.2493 (A.C. 1950)

• Combination Rate (both Specific and Ad Combination Rate (both Specific and Ad Valorem Rate) and the applicable rate is Valorem Rate) and the applicable rate is whichever is higher (“whichever is higher (“2 Chosen2 Chosen 1”)1”)

• 2 types of Tax Rates2 types of Tax Rates • Specific Rate: a uniform rate based on the vSpecific Rate: a uniform rate based on the v

olume of alcohol contentolume of alcohol content• Ad Valorem Rate: a percentage of the value Ad Valorem Rate: a percentage of the value

of the productof the product

Example of Specific Rate ApplicationExample of Specific Rate Application

Tax Value Tax Value == Degree Degree * Volume of Spirit in bottle* Volume of Spirit in bottle * Specific Rate* Specific Rate

Special Blended Spirit Special Blended Spirit 35 degree,35 degree, 750 c.c./bottle750 c.c./bottle, , Specific Rate 240 bahts Specific Rate 240 bahts / liter of pure alcohol/ liter of pure alcohol

Tax Value Tax Value = 35% * 750/1000 * 240 = 35% * 750/1000 * 240 = 63 bahts= 63 bahts

““More (Health & Social) Harmful, More Tax”More (Health & Social) Harmful, More Tax”

Ad Valorem Rate ApplicationAd Valorem Rate Application

Excise Tax Value Excise Tax Value == Selling Price at manufacture Selling Price at manufacture

* Ad Valorem Rate* Ad Valorem Rate

Before Tax

Price

Local Tax

Excise Tax

+

+

Before Tax

Price

Excise Tax

Local Tax

Selling Price at Manufacture

Inclusive Rate

Exclusive Rate

Inclusive Rate 50% = Exclusive Rate

111%

* BP 52.45 Bahts * SP 115.99 Bahts * ET 58.00 Bahts

““More More Luxury Luxury , More Tax”, More Tax”

2 Chosen 1 of Thailand 2 Chosen 1 of Thailand

5.385.38

3.65 3.65

3.99 3.99

0.50 0.50

0.92 0.92

0.490.49

S : AV S : AV (Time)(Time)

AV AV 20.32 B20.32 B

20.32 B20.32 B3.78 B 3.78 B 6. Local Beer-2 6. Local Beer-2 6 degrees 630 c.c.6 degrees 630 c.c.

AV AV 14.95 B14.95 B

14.95 B14.95 B4.096 B 4.096 B 5. Local Beer-1 5. Local Beer-1 6.4 degrees 640 c.c.6.4 degrees 640 c.c.

AV AV 308.44 308.44

308.44 B308.44 B77.40 B 77.40 B 4. Imported Deluxe Wisky 4. Imported Deluxe Wisky 43 degrees 750 c.c.43 degrees 750 c.c.

S S 58.8058.80 B B

29.76 B 29.76 B 58.8058.80 B B

S S 63 B63 B

58.00 B58.00 B63 B63 B2. Special Blended Spirit 2. Special Blended Spirit 35 degrees 750 c.c.35 degrees 750 c.c.

S S 17.50 B17.50 B

8.64 B8.64 B17.50 B 17.50 B 1. Local White Spirit 1. Local White Spirit 40 degrees 625 c.c.40 degrees 625 c.c.

The The Actual Actual

TaxTax

Tax Value fTax Value from Ad Varom Ad Valorem Methlorem Meth

odod

Tax Value Tax Value from from

Specific Specific MethodMethod

Type of Type of SpiritSpirit

3. Imported Economy Wisky 35 degrees 700 c.c.

Comparison of Tax Cost by Different Tax System

0200400600800

1000

Local W

hite Spirit

Impor

ted Eco

nomy W

isky

Local B

eer-1

Types of Spirit

Bah

t / L

iter

of P

ure

Alc

ohol

2 Chosen 1

Special

Blen

ded Spirit

Importe

d Delu

xe W

isky

Local B

eer-2

Specific Method only

Ad Valorem Method only

Keep 2 Chosen 1Keep 2 Chosen 1

Maximum Benefit from bothMaximum Benefit from bothSpecific Specific : : “More Harmful, More Tax”“More Harmful, More Tax”

Ad ValoremAd Valorem : : “More Luxury, More Tax”“More Luxury, More Tax”

Because it is more than or equal to Because it is more than or equal to Specific Method Only alreadySpecific Method Only already

Current Excise Tax Rate and Legislative RateCurrent Excise Tax Rate and Legislative Rate

92%92%55556060100%100%100100100100Local Beer-1Local Beer-1

100%100%505050506060%%240240400400Imported EconomImported Economy Wiskyy Wisky

42%42%2525606070%70%7070100100Com. Fermented Spirit Com. Fermented Spirit

100%100%5050505060%60%240240400400Imported Deluxe WiskyImported Deluxe Wisky

Special Blended SpiritSpecial Blended Spirit 100%100%5050505060%60%240240400400

6060

2525

Current Current RateRate

6060

5050

Ad Valorem RateAd Valorem Rate

100%100%100100%%100100100100Local Beer-2Local Beer-2

50%50%17.517.5%%7070400400Local White SpiritLocal White Spirit

%% of Legisla of Legislative Ratetive Rate

%% of of LegislLegislative ative RateRate

Current Current RateRate

Legis latLegis lative Rateive Rate

Specific RateSpecific Rate

Evolution of Alcohol Tax RateEvolution of Alcohol Tax Rate(Specific)(Specific)

Type 2/1/1992 14/5/1994 26/7/1996 11/9/199615/10/1997 25/2/1998 29/3/2000 28/3/200122/1/2003-NowBeer 100 100 100 100 100 100 100 100 100Community Fermented Spirit 100 100 100 100 100 100 100 100 70White Spirit 100 100 100 100 100 100 100 100 70Special Blended Spirit 100 100 100 100 100 100 150 240 240Special Spirit 100 100 100 100 100 100 150 240 240Whisky 100 100 100 100 150 150 150 240 240

Evolution of Alcohol Tax RateEvolution of Alcohol Tax Rate(Ad Valorem)(Ad Valorem)

Type 2/1/1992 14/5/1994 26/7/1996 11/9/199615/10/1997 25/2/1998 29/3/2000 28/3/200122/1/2003-NowBeer 48 48 48 48 50 53 53 55 55Community Fermented Spirit 20 20 20 20 25 25 25 25 25White Spirit 28 28 28 28 28 28 28 28 25Special Blended Spirit 28 28 28 28 28 28 35 45 50Special Spirit 24 24 24 28 35 35 35 45 50Whisky 24 24 24 28 35 35 35 45 50

Recommendation on TaxationRecommendation on Taxation

1.1 Keep 2 Chosen 11.1 Keep 2 Chosen 11.2 Increase Alcohol Tax Rate up to ceiling 1.2 Increase Alcohol Tax Rate up to ceiling

Other Legislative Measures

2.1 Enforcement on Alcohol Production Quality Control

2.2 Enforcement on Existing Laws and Establish new Laws for Alcohol Consumption and Consequences Control

2.3 Enforcement on Illegal Alcohol Production Control

ConclusionsConclusions Increase Tax for Increase Tax for

Decreasing Alcohol ConsumptionDecreasing Alcohol ConsumptionRecommendationRecommendation Keep Keep 2 Chosen 12 Chosen 1 Increase Tax Rate up to CeilingIncrease Tax Rate up to Ceiling Enforcement on Enforcement on

Production Quality ControlProduction Quality Control Consumption and Consequences Consumption and Consequences

ControlControl Illegal Production ControlIllegal Production Control

ResultsResults Overall Tax / Price of Overall Tax / Price of

Alcohol Market Alcohol Market Increased Increased

Consumption and Consumption and Consequences DecreaseConsequences Decrease

Government’s Revenue Government’s Revenue IncreasedIncreased

Thank youThank you

รศรศ..นพนพ..ยงยทธ ขจรธรรมยงยทธ ขจรธรรม รศรศ..นพนพ..วชย โปษยะจนดาวชย โปษยะจนดา แม ภรรยา และลกๆแม ภรรยา และลกๆ