Smokers now pay higher prices for their nicotine cravings after retailers and convenience stores made adjustments last week following the introduction of a controversial new excise tax structure earlier this month to fight against smoking.
Authorities previously applied a 20% value tax on packs costing up to 60 baht and 40% on more expensive packs. But the new regime has raised the tax rate to 25% for packs costing up to 72 baht and to 42% for more expensive packs. They also increased the volume tax from 1.20 to 1.25 baht per cigarette.
However, experts have warned that the recent price hike may not be the best solution, as smokers will switch to cheaper alternatives, especially contraband cigarettes. Instead, comprehensive measures should be implemented to avoid the substitution effect.
Sold under the counter
“The market has been very chaotic. Shops are speculating on cigarette prices. Some are charging 70 baht for packages that originally cost 60 baht,” said Varaporn Namatra, executive director of the Thai Tobacco Trade Association.
On October 15, the Thai Tobacco Authority ordered stores to increase the prices of local cigarettes from 55 baht to 63 baht, from 60 baht to 66 baht and from 95 baht to 102 baht. They will also adjust the prices of imported cigarettes from 60 baht to 68-72 baht on November 1, but will maintain a price freeze on those costing 150 baht.
Varaporn said higher prices would increase consumer demand for cheaper products, which happened during the previous tax adjustment. Sold at 25-30 baht a packet, contraband cigarettes are smuggled from neighboring countries via land borders.
âThe South is the biggest hub for illegal cigarettes. This trade is widespread in Phatthalung, Satun, Songkhla, Pattani, Yala and Narathiwat. Smokers can buy under the counter there. If you go to Hat Yai, they are available in stores with opaque glass, âshe said.
Varaporn said the tax hike is counterproductive as authorities have lost substantial income without reducing the number of smokers. In fact, cigarettes are subject to regulations globally.
âEveryone knows that smoking is unhealthy, but it’s a personal decision like drinking alcohol,â she said.
Varaporn said tobacco will never go away because other products will replace it, such as electronics and rolling your own cigarettes. Instead, authorities should educate the public about the health impacts and come up with other alternatives to nicotine.
âCigarettes are not our main product, but they also encourage consumers to buy other items,â she said.
Use global metrics
“Cigarettes and alcohol generate profits less than societal losses. That is why they are called the sin tax and should be subject to control,” said professor emeritus Dr Prakit Vathesatogkit, chairman of the Action on Smoking and Health Foundation, which called for the application of a 35% flat tax rate.
“Otherwise, the cigarette companies will get rid of the products to escape the impact of tax hikes under the two tier system,” he said.
Critics have pointed out that the previous tax readjustment ended in failure. Panuphol Rattanakanjanapatra, the governor of the Tobacco Authority of Thailand, said his annual profits had increased from more than 9 billion baht to 1 billion baht. Today, she is developing a hemp business to help around half a million tobacco farmers.
It also lost a substantial market share to a foreign cigarette company. After the new program was put in place, a tobacco giant raised and lowered retail prices. For example, he ditched one of his mid-priced packs to compete with local products.
Dr Prakit said the net cost of each package is only five baht, but the rest is taxes and profits for retailers and businesses.
“If they want a high market share, they will charge lower prices. In the past, the tax was 70% of the retail price. Packs costing 60 baht were taxed at 45 baht,” he said. he declares.
The doctor-turned-full-time activist said all types of cigarettes should be priced the same to deter smokers from looking for cheaper alternatives, but the government has not fully increased taxes on rollies as they are considered to be local products for low-income people.
“They are sold at 12 baht but taxed at only 2 baht. The substitution effect is our weakness which undermines anti-smoking campaigns,” he said.
After all, the new two-speed system deserves attention. Dr Prakit said studies show that an increase in the price of cigarettes by 10% will reduce the smoking rate by 4% on average. Higher income people will not quit, but middle and lower income people will smoke less.
âTaxation can help us achieve the goal of reducing the smoking rate to 15% by 2025. It is the most important tool of all. If taxation doesn’t work, we won’t achieve our goal, but even if it works, we may or may not achieve it, depending on whether or not the cigarette manufacturers engage in countermeasures, âhe said. he declares.
The target is in line with the World Health Organization. The National Statistics Office found that the smoking rate among people over the age of 15 (57 million) currently stands at 17.4% (9.9 million), compared to 19.1% (10, 7 million) in 2017, but the death rate is increasing.
“Smokers are getting older. About 70,000 have already died this year. Of these, more than 9,000 are passive smokers,” he said.
Although the consumption of cigarettes is a personal choice, governments are allowed to regulate consumption. When asked why countries don’t ban tobacco products, he said it would increase demand for contraband items. Instead, they ratified the WHO Framework Convention on Tobacco Control.
âThe measures include taxation, banning cigarette advertising and smoking in public, support for alternatives to tobacco growing, treating smokers and controlling contraband cigarettes. All can help reduce the risk of smoking. smoking, âhe said.