Coffee, tea products may face "sin" tax

Deputy Finance Minister Pruttichai Damrongrat yesterday said the taxes could be raised from the present level of zero to a maximum of 20 per cent to help offset the government's revenue shortfall.

Jacking up coffee and tea taxes is also part of the Finance Ministry's broader excise-restructuring programme, he said.

Under current law, the Excise Department can raise the tax rates on sales of coffee and tea products to a maximum of 20 per cent without having to get parliamentary approval.

"It is within the Excise Department's authority to raise the tax rate," Pruttichai added.

The agency has been under increased pressure to collect more taxes, as the government's revenue collection has been declining due to the impact of the global economic downturn.

Besides coffee and tea beverages, other products with caffeine content could be subject to a higher tax rate, due to their negative effect on consumers' health.

Sources said the rates could be based on the amount of caffeine in each of the products.

"We plan to levy the excise tax only on bottled, canned and other packaged beverages," said an official source, who spoke on condition of anonymity.

"Together with the other 'sin' taxes levied on alcoholic beverages, such as spirits and beer as well as cigarettes, we hope to boost revenue collection by Bt30 billion this fiscal year."

In addition, the agency is studying the possibility of levying more excise taxes on the telecom and insurance industries.

Meanwhile, Pruttichai said the Islamic Bank of Thailand, which provides financial services to both Muslims and non-Muslims, plans to grant new loans totalling Bt24 billion this year, up from last year's Bt16.7 billion.