TOBACCO
TTM lifting output aheadof tax hikes
WICHIT CHANTANUSORNSIRI
The Thailand Tobacco Monopoly will increase its production in hopes of increasing profits ahead of an expected excise tax hike on cigarettes. The cabinet on Tuesday agreed to increase the maximum excise tax for cigarettes to 90% of the ex-factory price or three baht per gramme of tobacco, equivalent to 60 baht per packet.
This compares with the previous tax ceiling of 80% of the ex-factory price or 60 satang per gramme, whichever is higher.
Existing excise taxes currently have an effective rate of 79% of the ex-factory price.
Prapatsorn Pongpanpisal, a spokeswoman for the Thailand Tobacco Monopoly, said it was expected to take several months before actual tax rates increased.
The delay offers an opportunity for cigarette sellers to profit based on the difference between the two rates by building up their inventories of cigarettes sold under the current rate.
Mrs Prapatsorn warned that retailers stockpiling cigarettes risked a loss of quality for their goods.
But some sellers are expected to take the risk, given the potential opportunities to profit by an average of one baht per pack based on the difference in tax rates.
The Thailand Tobacco Monopoly produces 105 million cigarettes per day and maintains an inventory equal to around seven to 10 days of product to meet market demand.
Mrs Prapatsorn said the TTM planned to increase daily production to around 150 million cigarettes per day to meet higher market demand over the next several months.