A controversial decision that harms people, economy, and society
The Thai government has taken a sudden and controversial decision to slash alcohol taxes in a purported effort to boost the tourism industry. The cabinet approved the decision to exempt wine from import tariffs. The import taxes on wine are currently at 54% and 60% of their declared value.
The excise tax on wine will also be reduced from 10% to 5%. The decision also resulted in the reduction of the excise tax on locally produced alcohol from 10% to 0%. The government claims this would assist small-scale alcohol companies. But making alcohol cheaper will drive up alcohol use and societal costs and harm.
The new tax rules will come into effect very soon. The decision to reduce alcohol taxes follows some of the highest levels of government revenue gained from alcohol in recent years.
A recent increase in excise brought in as much as 12bn baht in tax revenue. The tax contribution from imported wine increased the most. Taxes on specific products such as French and American wines used to be as high as 400% before the tax cut. These included excise tax, municipal tax, health tax, and import tariffs. With the sudden and controversial decision, the Thai government is giving up on alcohol tax revenue to cover the costs of alcohol harm to people and society.
Massive alcohol harm and costs to people and society
A compelling study from October 2023 revealed the massive alcohol burden and costs to people and society in Thailand.
The past-year prevalence of harm from co-workers’ alcohol use was 17.8% among the employed population. On average, an affected worker worked 16.0 extra hours due to co-workers’ alcohol use. In total, 28.8 million hours of extra work was attributed to co-workers’ alcohol use in 1 year. The cost of these extra work hours was 1.8 billion Thai baht (57.8 million USD).
According to media reports, there are no details about the impact of the alcohol tax cut on public support systems. The impact on second-hand alcohol harm such as lost productivity and road accidents is also not know. What is known is the high levels of harm that alcohol causes to Thailand at present.
According to the World Health Organization, the total per capita alcohol consumption in Thailand is 8.3 liters.
According to the NCD Investment Case for Thailand, the country is particularly vulnerable to non-communicable diseases (NCDs). One major driver of NCDs is alcohol. Thailand has the highest level of alcohol use in the WHO South-East Asia region (twice the regional average).
Thai men who use alcohol consume 26.2 liters of alcohol per capita. Nearly half (47.4%) of young people between 15 to 19 years of age who consume alcohol engage in binge alcohol use.
This high level of alcohol consumption, especially among men in Thailand, translates into a severe burden of social harm, such as road traffic fatalities.
Driving under the influence (DUI) of alcohol is reaching epidemic levels in Thailand. According to the World Health Organization (WHO), 26% of road deaths in Thailand are due to alcohol.
That is why people and communities are standing up to campaign against the government’s gift to the alcohol industry.
Alcohol tax cuts harm national budget
The impact of the government decision to slash alcohol taxes will seriously harm the Thai government’s revenue and the resources to invest in society. Thailand possesses comprehensive social protection systems that provide care for people of all ages. The country also has social insuarance schemes which include services such as pension, invalidity, working injury, family, health, sickness, and maternity. These welfare programs depend on public resources to provide this care for the Thai people.
Last year, the government collected almost ฿178bn (£3.9bn) in alcohol, beer and other alcohol product taxes. The breakdown is as follows:
- ฿64.17bn (£1.4bn) from alcoholic beverages,
- ฿86.5bn (£1.9bn) from beer, and
- ฿26.95bn (£584m) from other alcohol products.
In this context, Stop Drink Network Thailand – a country-wide people’s movement for alcohol prevention, and a member organization of Movendi International – is adamant in its criticism of the sudden and ill-informed decision to worsen alcohol policy in Thailand that has been geared towards benefitting the people and taxing alcohol companies to pay for the costs of the heavy alcohol harm that the products and practices of the alcohol companies are causing.
According to Theera Watcharapranee, Director of Stop Drink Network and Board Member of Movendi International, the alcohol tax reduction is a shock to people who are trying to prevent alcohol harm in the country. Speaking to media, he said that the reversal of the policy benefits the alcohol industry instead of local communities, as per Bangkok Post reporting.
What the government is doing now is trying to have more revenue from tourism while ignoring the consequences of alcohol on public health.”
Theera Watcharapranee, Director, Stop Drink Network
Mr. Watcharapranee also made special reference to the WHO finding that every US$1 spent on alcohol policy yielded up to US$8 in economic value in return.
In this context, raising alcohol tax as a policy makes much more economic sense than slashing it. Raising alcohol taxes in an evidence-based way would yield other health, social, and economic gains by lessening the burden on the healthcare system and on economic growth due to alcohol.
For example, in 2022 experts from the World Health Organization modelled the return on investment for the NCDs risk-factor-specific policy packages. They found that the alcohol policy best buys would have the greatest impact in terms of lives saved (114,764 lives saved). And more than 5.8 million healthy life years could be gained if Thailand implemented high-impact alcohol policy solutions.
For the investment in the alcohol policy package alone, the total productivity benefits over 15 years would be THB152.56 billion (approx. US$ 4.6 billion) with a return on investment of 2.28.
Alcohol policies, particularly those to prevent alcohol use at an early age and prevent morbidity that would last a lifetime, are expected to have the highest impact on healthy life-years.”
Ministry of Public Health of Thailand, World Health Organization, United Nations Development Programme, and the United Nations Inter-Agency Task Force on the Prevention and Control of NCDs
This evidence makes it clear that the sudden and controversial decision of the government to slash alcohol taxes in a purported effort to boost the tourism industry is a gift to alcohol companies rather than a contribution to economic growth, community health, people’s welfare.
People and communities still hope that their government will consider the serious consequences in fueling alcohol harm, costs, and worsening government revenue before proceeding with such a detrimental policy.
Sources
Bangkok Post: “NGO slams new alcohol tax rates“
The Drinks Business: “Thai government cuts alcohol taxes to boost tourism“
