Here’s where your money goes when you buy a pack of cigarettes.
May 31st is The World No Tobacco Day, this year the date falls on a Friday in 2019. The World Health Organization (WHO) has published under the Tobacco Free initiative what the focus of the 2019 World Tobacco Day is about. The focus is on tobacco and lung health. A campaign that raises awareness on the negative impact of smoking. Another purpose of the campaign is to advocate for less tobacco consumption globally.
In Thailand, the increase of cigarette tax from 20% to 40% is moved ahead one year. The new tax increase will be enforced on 1 October 2020 instead of 1 October 2019. The goal of the delay is to help tobacco farmers and those involved in the tobacco industries. There will be another evaluation of whether the tax increase shall be moved again in the future after the new government sets in place.
In 2017, the Excise Department changed the tax structure making the retail price for cigarettes start at 60 THB per pack. Using this as the base of calculation, the money earned from selling a 60 THB pack of cigarettes can be separated into 1. Tax 47.16 THB, 2. Cost of production 11.84 THB, and 1 THB profit.
The Cost of production at 11.84 THB is 19.73% of 60 THB. This cost comes from 1. Tobacco cost, 2. Staff cost, 3. The discount from the production company to the distributors.
Tax at 47.16 THB is 78.60% of 60 THB. The tax can be separated into,
- Excise tax at 24 THB is 40% of 60 THB,
- Excise tax at 11.21 THB is 18.68% of 60 THB (Calculation based on 20% tax from retail price).
- The Ministry of the Interior tax at 3.52 THB is 5.87% of 60 THB.
- Thai Health Promotion Foundation funds at 0.70 THB is 1.17% of 60 THB.
- Older Fund Administration funds at 0.70 THB is 1.17% of 60 THB.
- Provincial Administration Organization tax at 1.86 THB is 3.10% of 60 THB.
- VAT at 3.93 THB is 6.55% of 60 THB.
The Profit that comes from a 60 THB pack of cigarettes is 1 THB which is 1.67% of 60 THB. Before the latest tax increase, the tobacco companies and the importers received an average profit of 7.50 THB per pack of cigarettes.
FB Caption: 1 pack of 60 THB cigarettes bring in only 1 THB of profit, before the latest tax increase the average profit per pack of cigarettes was at 7.50 THB.
Source: WHO, Mthai