When the draft alcohol act reached the National Legislative Assembly (NLA), Public Health Minister Mongkol Na Songkhla told the members that alcohol products caused health and family problems, accidents and crimes, which is not only affecting the country's economy but also its society.

"Measures are needed to control alcohol products, to ensure rehabilitation of alcoholics, to mitigate social and economic problems, to remind the public of potential health risks, and to narrow the youth's access to alcohol," he said.

The draft law covers 7 sections:

*the national alcohol policy commission

*the alcohol product control committee

*the office of the alcohol product control committee

*lalcohol control

*treatment and rehabilitation of alcoholics

*state officers' authority

*penalties.

Despite arguments against the bill, the NLA on that day approved the bill.

This move worried the alcohol industry, which has tried all possible means to block the law. Of maximum concern is the total advertising ban as well as the unlimited power of the regulatory committee over production and sale.

In urging the NLA to turn down the bill, the Federation of Alcohol Control of Thailand (Fact), representing 24 associations of alcohol importers, restaurants, hotels and alcohol beverage producers, said the act was drafted without participation from the public and public operators. The bill backs the abuse of government power against the democratic system and does not cover production and consumer protection, which, as such, would not actually solve social problems, it claimed.

"It's unfair without public participation … and there are loopholes. The law offers no clear measure on how to mitigate the economic impact on tourism, hotels, restaurants, retail, and other related businesses," said Varin Thiamcharas, chairman of Fact's legal team.

Contradicting the Public Health Ministry's declaration that the bill is aimed at protecting society, Fact saidthe law lacks measures to protect consumers. "All consumers are entitled to information. While non-drinkers need education on drinking and associated risks, drinkers should be warned of risks and told to refrain from causing social problems. By this law, they are deprived of the information on product quality, alcohol content and prices. The law should educate drinkers on how to drink responsibly - the standard drinking quantity."

Fact also attacked the ministry for failing to enforcing tax measures to control production - the key problem of social alcohol-driven problems. It also quoted a research by Thailand Development Research Institute as saying that the state measures in controlling advertising and restricting selling time could not reduce consumption as consumers still had access to unregulated shops.

Amid their clash of ideas, the Finance Ministry, which is in charge of taxes levied on alcohol products, has been silent, though it is believed to hold the key role in raising taxes and effectively reducing consumption.

The Nation recently obtained a 2004 research of TDRI titled "Excise Tax and Alcohol Consumption".

The research found that in 2003, the total social cost of alcohol consumption was estimated at Bt8 billion to Bt26 billion, or about 0.22-0.56 per cent of the country's gross domestic product.

The research showed that external costs - costs of alcohol consumption to others - in 2003 totalled Bt71.27 billion. The external cost from consumption of 305 million litres of pure alcohol worked out to Bt233.67 per litre. As such, excise taxes on alcohol products should not be lower than Bt250-Bt300 per litre. It also remarked that the costs exclude damage to assets of third party', family violence, health cost which is estimated at Bt620 million per annum, as well as other problems from drinking.

TDRI suggested that the government impose a similar tax structure on products in the same category to create a level-playing field.

"The Excise Department should not adopt different ex-factory prices in calculating excise taxes, as those with higher ex-factory prices are subject to higher taxes. Singha beer is categorised as a standard beer with higher ex-factory prices than Chang beer. Hence, Singha beer is subject to higher taxes though Chang beer has higher alcohol content. The taxes give Chang an advantage over Singha, as it can quote a lower sale price and boost sales.

"The Excise Department's claim that alcohol companies try to minimise their ex-factory prices to be subject to the lowest taxes are reasonable. But imposing taxes according to prices to maximise tax collection from standard and premium beer creates unfair competition. Levying taxes according to alcohol content will create a level playing field," the research said.

"Collecting taxes according to alcohol content is in line with the principle that the state does not want the public to consume high-alcohol products as high-alcohol products tend to cause higher social costs and other damages."

It suggested the highest excise taxes should be Bt650-Bt950 per litre. This would affect white whiskey production and restrict the poor.

"However, the government should not adopt low-tax policy on high-alcohol products as the poor would be most affected by such a move.

"Instead, it should encourage the producers to produce low-alcohol white whiskey through a tax concession. The producers will enjoy a tax break for the reduced alcohol content. For example, in the first year the first 25 per cent would be waived from tax while the remaining alcohol content would be subject to the Bt900-per-litre tax."

The Finance Ministry has imposed two bands of excise taxes on alcohol products - levied on the alcohol content and sale price, whichever is higher. That explains why Chang, which sells at a retail price of about Bt38, is subjected to lower taxes than Singha, which has a retail price of Bt40. Likewise, Johnie Walker Black Label is taxed higher than local white whiskies though producing similar alcohol content.

The ministry last year set about revamping the tax structure, but ended up adopting the two-tax formula, which in effect maintains the distorted tax structure. Then, it reasoned that local white whiskies should not be taxed higher, as a way of protecting local communities that produce the whiskies.

While supporting the law, Ammar Siamwalla, an NLA member, remarked that the controlling measures are too narrow and should integrate other tools such as tax measures.

"Ad ban is hard to control … The ban will kill small business operators as existing operators would switch their ad budget to subsidise price cuts," he said, adding the law is flawed, focusing only on advertising not the tax structure.

In "Siam This Morning" programme last Friday, Parames Ratjaiboon, honorary president of the Advertising Association of Thailand (AAT), referred to the Excise Department's figures that showed last year about 18-19 million litres of blended whisky was sold, against 500 million litres of white whisky. "We should ask if the NLA knows that what people consumed the most were not the whisky advertised in newspapers."

He also said that the TV advertising budget of about Bt3 billion annually could be used to subsidise price cuts, as alcohol companies have to survive while those selling white whisky would benefit. He also questioned if ad bans would reduce consumption. "Malaysia bans TV and radio ads but consumption has risen. Norway, which imposes the strictest measure on advertising, also witnessed a 20 per cent increase in consumption last year."

Observers in the alcohol industry also expressed concern that the law would block the development of new products. They also said that established brands would still benefit through international ads while those cheap products that have never advertised would continue to be popular.

What the draft act promises is a lengthy discussion on its pros and cons and 10 days from now, the Thai public will know the changes to be introduced to the bill.