Decree to enable tax hikes on fuel and cigarettes

Deputy Finance Minister Pruttichai Damrongrat said more tax revenues were needed to finance public investment schemes.

Altogether, the planned tax hikes will lead to an additional revenue of Bt20 billion per annum on cigarettes and alcoholic beverages while another Bt55 billion will be generated by the Bt2-per-litre tax hike for petrol and diesel.

The tax ceiling on cigarettes will go from 80 per cent to 90 per cent. In the first stage, the rate will be 85 per cent, so the retail price of cigarettes would go up by Bt11-Bt16 per pack.

For fuel products, the Excise Department will double the tax rate ceilings on petrol and diesel from Bt5 and Bt4 per litre, respectively, to Bt10 per litre.

However, the first-round tax hikes will be limited to only Bt2 per litre for both petrol and diesel, he said.

Besides boosting the government's revenue, the tax hikes are aimed at discouraging people from consuming harmful products such as cigarettes and alcoholic beverages.

Meanwhile, Pruttichai also ordered tax collectors to work more effectively to achieve the new tax collection target.

"Efficiency of tax collections must be improved, as we have seen excise revenue dropping by about 20 per cent," he said during a meeting at the Excise Tax Department.

Tax receipts during the first seven months of the current fiscal year, which started last October, have reached Bt148.29 billion.

The department has to improve its computer system. If its officials were inadequate, the department has to find how to reorganise itself or mobilise more people to the tax-collecting task, he said.

"Tax rules must be clear cut. The subjective judgement of tax collectors must be minimised," he said.

He was also worried that higher taxes may encourage more smuggling.

From last October to last month, the department seized sizeable quantities of contraband cigarettes and liquor and imposed fines of Bt340.69 million, up 23.52 per cent from the same period the year before.