The Excise Department will cut the tobacco tax to 2.5 satang per gramme from 10 satang for one year, starting Jan 1, 2020, to give farmers time to adjust.
The move comes after tobacco farmers cried foul that a higher tax rate of 10 satang per gramme enforced from May 7, 2019 had taken a toll on their income and was inconsistent with the Excise Department’s recent decision to push back a 40% cigarette tax hike by one year to Oct 1, 2020.
Only retail farmers who produce fine-cut tobacco or those with an annual production output of up to 12,000 kilogrammes are subject to the temporary excise tax cut, said Nutthakorn Utensute, director of the Excise Department’s Bureau of Tax Planning.
Thailand has 10,450 tobacco growers, of whom 15 have production capacity of more than 12,000 kilogrammes a year. They all live in Nong Khai, Phetchabun, and Chaiyapum provinces.
The previous government approved a hike in the excise tax on tobacco to 10 satang per gramme from 0.5 satang to narrow the retail price gap between factory-made and hand-rolled cigarettes after many smokers switched to hand-rolled.