Excise Department Confirms 2% Sin Tax Will Not Be Abolished, Plans to Channel 14 Billion Baht a Year into National Budget
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The Excise Department has confirmed that it will not abolish the 2% additional excise tax, or On-top 2%, levied on liquor and tobacco products, following reports that the government would cut the tax to benefit business groups. Mr. Pornchai Theeravej, Director-General of the Excise Department, said the government will restructure the tax by issuing a ministerial regulation under the Excise Tax Act B.E. 2560 (2017) to raise the standard excise rate on liquor and tobacco by an equivalent amount immediately, while proposing a bill to the legislature to end the direct transfer of the 2% additional tax into funds, so that all the money flows into the treasury as state revenue. Mr. Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, has assigned the Excise Department to study the approach, which will not add to the burden on operators because they will still pay tax at the same rate; only the route of the money into the fiscal system will change directly. As a result, the four agencies and funds that previously received direct allocations, namely the Older Persons Fund, the National Sports Development Fund, the Thai Health Promotion Foundation, or ThaiHealth, and the Thai Public Broadcasting Service, or Thai PBS, must enter the annual budget request and approval process under the Budget Procedure Act B.E. 2561 (2018), like other government agencies. Statistics for the four fiscal years 2565–2568 (2022–2025) show that these four agencies and funds received a combined total of 58,031 million baht from the sin tax, or an average of more than 14,000 million baht a year. The Older Persons Fund received the most at 17,517 million baht, the National Sports Development Fund 16,299 million baht, ThaiHealth 16,169 million baht, and Thai PBS 8,046 million baht. The bill was proposed by members of the House of Representatives from the Bhumjaithai Party. It is currently undergoing public consultation in the House of Representatives and must be submitted to the Cabinet for consideration in the next step.