LVH exclusive - Thailand increases Sin Tax

The name used in Thailand for the tax paid on alcohol and cigarettes may bring to mind a different vice that has long been associated with the Land of Smiles, but the term "Sin Tax" is actually a reflection the conservative nature of Thai culture. Drinking and smoking, though prevalent, are still widely considered sins, especially by the older generation and the government recently addressed the popularity of these inappropriate habits by increasing the cost to consumers.

For all its sins, Thailand is also known as a very affordable place to visit on holiday, which is one of the reasons why it ranks top of the tourist tables year after year, despite political upheaval or natural calamity. Even at the luxury end of the sale, the prices for quality accommodation, fine food and quality retail products is still much lower than in many other countries around the world and even when it comes to booze and cigarettes, tourists will not be unduly put off by the modest tax increases announced recently.

Alcohol excise tax on Thailand's favourite tipple, rice whiskey, has been increased from 120THB (3.80 USD) to 150 THB a litre (4.70 USD) depending on the alcohol content, while for blended liquor the price has increased from 300 THB (9.50USD) to 350 THB (11USD) per litre. The Thai cabinet also approved an increase in cigarette tax based on volume — either per cigarette, or its weight. This represents a rise of 2%, meaning an increase of around 10 THB per pack (32 US cents).

Although the price hikes may seem small to citizens of some countries, the proceeds will increase the Thai government's revenue by some 12 billion THB (382 million USD) annually. Thailand's Prime Minister, Yinglick Shinawatra said in the press that liquor and tobacco weakened public health and destroyed the environment, meaning it was necessary to use money from taxes collected on such products to offset budget shortfalls and state agencies have been assigned to work out strategies that will see the taxes used to improve and strengthen people’s health. One possibility may be to use of the sin tax funds to support the government's health insurance scheme, but this may require amendments to the law.

When it comes to alcohol, Thailand offers a wide selection of local and imported beverage types and brands. Wine has become popular with locals as well as foreigners in the last few years, but is currently taxed at 60%, the maximum limit set by the government. Even Europe is cheap by comparison. In Switzerland, €6 (7 USD) will get you decent bottle of red, but in Thai supermarkets, you pay $16 or $17 USD for a mid-range wine. Beer is much less expensive at around $1.50 USD for a half a litre bottle, but with the government now considering an amendment to create fairness for the liqour market and reduce consumption, prices for both may increase in the longer term.

For now at least, visitors to Thailand still enjoy bargains when it comes to many of life's pleasurable (albeit unhealthy sins), as long as you are prepared to pay a little over the odds for a decent vintage to go with your meal, you can live life to the full, even on an extended vacation. In fact, when you balance out the savings made on other holiday essentials in Thailand, its very tempting to order that second bottle.