The state-owned Thailand Tobacco Monopoly (TTM) said its sales revenue outpaced that of imported cigarettes again during the first four months of fiscal 2019, crediting the launch of cheaper new brands to win back market share.
Domestic cigarettes contributed 12 billion baht in tax revenue to the Excise Department for the October-to-January period, exceeding the 10 billion baht generated by imported brands, said Patchara Anuntasilpa, the department's director-general.
The four-month revenue figure shows the error of pointing to the cigarette tax hike as the culprit for TTM's recent revenue decline, Mr Patchara said.
TTM's sales fell sharply from multi-billion-baht totals to hundreds of millions of baht after the excise tax structure was revamped in September 2017. Suggested retail price replaced ex-factory price and the cost, insurance and freight (CIF) value as the basis for excise tax computation.
TTM recently claimed that it lost market share as cigarette importers exploited the new excise levy by cutting retail prices to pay a smaller tax burden.
The impact from the excise tax structure is expected to hit TTM harder once the single rate of 40% of the suggested retail price goes into effect in fiscal 2020, starting Oct 1, 2019, in contrast to the current 20-40% levy.
With the current excise tax structure, cigarettes are liable for tax both in terms of volume and value, regardless of price. The levy in terms of volume was raised to 1.20 baht per cigarette from 1.10 baht, while the tax based on value was divided into two rates: 20% of suggested retail price for cigarettes priced below 60 baht per pack and 40% for those priced at more than 60 baht.
Mr Patchara said 602 million packs of cigarettes were sold during the four months to January.
Cigarette sales in Thailand for the last fiscal year dropped to 1.7 billion packs from 2.18 billion a year earlier, he said.
Excise tax on imported cigarettes amounted to 37 billion baht in fiscal 2018, compared with 30 billion from domestic cigarettes. In fiscal 2017, imported cigarettes contributed 22 billion baht to the Excise Department and locally made cigarettes generated 46 billion.
Regarding TTM's request to push back the implementation of the single 40% tax, any change needs to be discussed among all related parties, Mr Patchara said.
Although the single rate could trigger more smuggling, he said the department is ready to tackle the issue.
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