THAILAND
A Philip Morris (Thailand) Limited (PMTL) study conducted by Nielsen which compared Q4 of last year with the same period in 2016 showed that illicit cigarette use in Thailand has more than doubled, costing the country at least THB3.6 billion (US$116 million) a year in lost tax revenue.
According to study findings, non-domestic cigarettes, or cigarettes without a Thai tax stamp, rose to 6.6% in Q4 last year, an increase from 2.9% in Q4 of 2016.
Pongsathorn Ansusinha, PMTL’s director of corporate affairs, said the study also found that the problem is most widespread in the south, with the provincial incidence as high as 76.6% in Satun, 67% in Songkhla, and 40% in Patthalung.
Ten thousand samples of discarded cigarette packs were collected for the study; 669 packs (6.6%) were found without Thailand’s tax stamp and were thus considered “non-domestic” cigarettes. Two cigarette brands made up about half of these non-domestic samples, neither of which was registered with the Thai excise department.
Ansusinha said that after the excise tax reform in September 2017, the company anticipated legal cigarette consumption volume to undergo a significant reduction this year because some smokers can no longer afford to buy legal cigarettes. They would either quit smoking or turn to roll-your-own tobacco or illicit cigarettes. “By using the 6.6% rate, we estimate the consumption of non-tax-paid cigarettes in Thailand could reach about 100 million packs. This could mean a loss of excise revenue of at least THB3.6 billion per year, assuming excise tax of THB36 per pack in 2018,” he said.
According to Ansusinha, this amount could rise as the excise tax is set to rise again in October 2019, when all cigarettes would be subject to a specific tax rate of THB24 per pack plus 40% ad valorem tax. Also, assuming the illicit cigarette use remains at 6.6% while the volume of legal cigarettes further contracts, the excise revenue loss could be as large as THB5 billion per year in 2020.