Bangkok: Thawiphip Limjitrakorn, MP of the People's Party, received a letter from the Craft Beer Business Association and the Thai Local Liquor Association, urging the Excise Department to revise the liquor tax structure.
According to Thai News Agency, the associations argue that the Excise Department's method of calculating taxes based on retail price does not accurately reflect the situation for small-scale producers, cutting off their opportunities.
Mr. Thawiphip stated that today, both associations would be submitting a letter regarding the new excise tax structure that will be collected by the Excise Department, which will negatively impact small-scale alcoholic beverage producers. He noted that while the Progressive Liquor Act has been pushed forward, unlocking production aspects alone is only one door open. There are still issues concerning alcohol control laws and advertising that disadvantage small producers because they lack the marketing costs of larger companies. Crucially, tax reform is essential for achieving true liquor progress. He mentioned that around March, an announcement was made regarding the criteria and methods for surveying and collecting retail price data, determining the popular price base, and sales locations, which will be enforced tomorrow. Therefore, the associations contacted him and submitted the letter today.
A representative from the Craft Beer Association stated that domestic liquor tax is collected in two ways: based on alcohol content and based on retail value. The problematic aspect of the retail price tax calculation, at 22% of the retail price, is that small-scale producers face higher production, distribution, and access costs compared to larger companies due to lower production volumes. They argue that the government's approach of calculating taxes based on retail prices at the supermarket level is incorrect, as the costs associated with accessing supermarkets differ for small and large producers. Therefore, they are calling for a review and adjustment of the tax base to a tiered system based on production volume, similar to other goods. This would allow small-scale producers to grow, use the tax revenue to develop their products and services, and, as they grow, pay higher taxes, thereby fostering a stronger and more diverse range of businesses.
Meanwhile, Mr. Natthachai Ungsriwong, president of the Thai Local Liquor Association, stated that the government's uniform taxation of both large and small producers, based on retail price, means that smaller producers, who manufacture less, cannot keep costs low. This forces them to mark up their retail prices due to higher distribution costs, and consequently, they must pay taxes reflecting that increased price.
Mr. Thawiphip concluded by saying that taxes should be levied based on the alcohol percentage in beverages. He viewed the proposed regulation as inappropriate, citing an example: if one day, beer shops nationwide in the craft beer association raised the price of beer from a major producer to 1,000 baht per bottle and reported it as the retail price to the Excise Department, would the Excise Department also have to calculate the tax on that beer? He argued that calculating taxes from the final retail price is unreliable, as prices vary from store to store.
Furthermore, vague and nonsensical regulations result in arbitrary enforcement by officials in each locality, creating opportunities for corruption and bribery. Therefore, I urge Mr. Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, in his capacity as former Director-General of the Excise Department and likely someone who understands this problem well, to use the government's authority to instruct the Excise Department to review and revise the tax structure. This should involve various associations in the restructuring process and allow them to provide their input from the beginning.
Mr. Thawiphip revealed that tomorrow's meeting of the Standing Committee on Economic Development, chaired by Mr. Veerayut Kanchuchat, a Member of Parliament from the People's Party, will include this issue as one of the first items for consideration. The Excise Department will be summoned for clarification in order to meet with and hear the voices of small-scale producers.