Thailand: Alcohol tax 'better' than tax by the bottle, Boon Rawd Brewery Co suggests

Boon Rawd Brewery Co, which makes Singha beer, proposed on June 16 a new model for collecting beer tax based on alcohol content, saying the government would lose no tax revenue, but would actually collect more, Bangkok Post communicated.

The suggested structure would peg tax at 550 baht per litre of 100 degree of alcohol. Currently, beer tax is collected at 55% of the product price. The Excise Department is reviewing and taking suggestions on tax collection on several products _ beer, cars, liquor and cigarettes among them.

Boon Rawd company president, Santi Bhirom Bhakdi, Singha beer, with six degrees proof alcohol content, is taxed at 20.32 baht per 0.63 litre bottle under the current tax model.

Taxes would actually increase to 20.79 baht per bottle under the proposed change. In fact, the proposal might prove impractical for the 72-year-old Boon Rawd, because the firm could see its sales drop between 10% and 15%, Mr Santi said. But he said Boon Rawd would raise its competitive advantage in markets abroad to offset a probable sales loss at home.

Overseas, especially in some US states, Singha beer is called liquor, because beer must have four degrees of alcohol or less, while Singha is rated at six degrees of alcohol content.

(Six degrees of content is roughly 3% alcohol, but the degree actually measures the percentage content of added sugar.)

The tax base thus creates barriers for market access for Singha beer abroad. If the revenue department adopted the Boon Rawd suggestion, this would give the brewer more incentive to produce beer with lower alcohol content for export only. Mr Santi did not go into detail.

At home, though, the beer industry would start to change too, he said. The more alcohol producers put into their product, the more expensive their tax bills. As a result, brewers would likely launch light beers, providing more choices for consumers. A side effect could be to reduce alcohol consumption in public, a government policy.

Mr Santi believed most people, given a choice, would drink products following their drinking capacity. Women, especially, would likely drink for enjoyment rather than for the amount of alcohol in beer.

He insisted his tax suggestion would be fair to all breweries, and would help to strengthen them to compete with foreign rivals as trade liberalisation brings more foreign brands into the nation.

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