Taxation Strategy Taxation Strategy to Reduce to Reduce Overall Alcohol Overall Alcohol Beverage and Beverage and Contaminated Liquor Contaminated Liquor Consumption Consumption Dr.Bundit Sornpaisarn Dr.Bundit Sornpaisarn Center for Alcohol Studi Center for Alcohol Studi es (CAS) July 13th, 200 es (CAS) July 13th, 200 5 5
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Taxation Strategy to Reduce Overall Alcohol Beverage and Contaminated Liquor Consumption Taxation Strategy to Reduce Overall Alcohol Beverage and Contaminated.
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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)
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
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