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Published on January 16, 2008

The ministry will collect 1.5 per cent on top of the current excise tax on liquor, beer, wine and cigarettes from January 15, said Somchai Apivatanaporn, acting director-general of the Excise Department.

The money will support the operation of TITV, which became the Thai Public Broadcasting Service (TPBS) after the Public Relations Department unplugged TITV from midnight on Monday, marking the beginning of its transformation into public TV.

Over the next 10 years, the Finance Ministry is set to financially support the new public TV with up to Bt2 billion a year. Therefore, the ministry has started to collect more "sin taxes" to support the operation of TITV after the Public TV Act began to be enforced on January 15.

Somchai estimated the department would transfer Bt1.7 billion for funding TITV this year. The tax increase would raise the cost of production for alcohol and cigarette manufacturers, and they may pass the cost to consumers, he said.

The retail price of cigarettes may rise Bt1 per pack and liquor and wine prices Bt3 to Bt5 per bottle, he said, adding that it is depends on the producers how much the prices would increase.

The current tax rate on a pack of Thai cigarettes is Bt35, while the new tax will be Bt35.52. Imported cigarettes are currently subject to a Bt40 rate and the new rate will be Bt40.6. Liquor products such as Johnny Walker Black Label were previously subject to a Bt200 tax per bottle and will now see a new rate of Bt203.

Beer is currently taxed between Bt12 and Bt18 per bottle depending on its category - premium, standard or economy. The tax hike will be only Bt0.2 per bottle, said Somchai.

In another development, Finance Ministry spokesman Somchai Sujjapongse said the government ran a cash-flow deficit in December, the third month in row. The cash deficit last month was Bt51.64 billion.

In the first quarter of fiscal 2008 (October to December), the government ran a cash deficit totalling Bt115.65 billion, suggesting public spending to boost the economy, he said.

The large deficit derives from more spending on investment, which will increase 176.7 per cent year on year, he said.

The government plans to have a budget deficit of Bt165 billion this fiscal year. Somchai expects the government's fiscal position to be in line with the plan as tax revenue will come in later quarters. If the new government is formed quickly, it will be better for the economy, Somchai said in response to worries about the economy being affected by delays in the formation of a new government.  

He dismissed the slide in the stock market caused by lower confidence in the economy.

"The SET Index is not a good economic barometer," he said. The baht is under high pressure as the US economy deteriorates and the central bank should be more flexible in transferring baht to invest overseas, he added.

Wichit Chaitrong

The Nation