Changing Alcohol Tax Structure
The alcohol tax structure was recently adjusted, effective 3 September 2013. The alcohol tax structure in Thailand had not been adjusted for a long time.1 Although, the government has periodically raised the alcohol tax, the method for raising the alcohol tax was referred to a traditional alcohol tax (Ad Valorem Rate with Specific Floor),or was known among excise people as ?The two-legs of tax?. The two-legs of tax is to calculate tax by using values for an Ad Valorem tax and a Specific Floor. The one providing the highest tax is selected to calculate the alcohol tax. The alcohol tax modification this time is to change the alcohol tax structure to be a Mixed rate system. The Mixed rate system consists of several Tiers of specific rates separated by quantities of alcohol degrees, last wholesale prices, Tier specific rates per litre of pure alcohol and quality. The one providing the highest tax will be selected and added to the highest tax calculated from the last wholesale price. This calculation method for the new alcohol tax structure requires several calculations and is more complicated than the previous one that many people also complained was far too complicated. This new method for alcohol tax calculation is more complicated and conflicts with best practice in tax collection which emphasizes implicit and transparency. The Ministry of Finance provides reasons for the modification to this new alcohol tax structure stating that it is suitable for the Thai economic situation nowadays.
This article is written to make the new alcohol tax structure understandable, and to analyze and evaluate how modifications have been applied and impacts, such as overall tax burden (increased or decreased),impacts on the Ministry of Finance (increasing or decreasing government income), and on the economy (increasing or decreasing alcohol prices versus the demand for alcohol consumption).
