Thai Cabinet Hikes Taxes on Liquor, Cigarettes, Cars

The government of Prime Minister Prem Tinsulanonda, after a week’s debate on a major tax package, has approved excise hikes on liquor, beer and cigarettes and new import duties on cars and trucks.

Although the boosts still await the signature of King Bhumibol Adulyadej, the price of a pack of cigarettes in shops Wednesday had already increased from about 43 cents to 47 cents. A cigarette shortage blamed on hoarding by wholesalers anticipating an even larger increase has abated.

Prem’s Cabinet debated for six hours Tuesday a comprehensive tax package submitted by Finance Minister Sommai Hoontrakool. While some tax measures suggested by Sommai to narrow a budget deficit were deferred or discarded for now--including a proposed withholding increase on fixed deposits--the Cabinet approved increases on a range of what government spokesman Trairong Suwankhiri described as “luxury and nonessential products.”

Some examples:

--An import ban on fully assembled passenger cars with engines larger than 2,300 cubic centimeters was lifted, but a duty of 600% was applied. An auto industry official was quoted as saying that the duty would put the cost of an imported Mercedes-Benz of the 280 series at more than $100,000.

--Imports of trucks, pickups and vans for assembly here will also face higher duties, though not as steep as those on the big-engine sedans.

--Excise taxes on Thai whiskey and beer will be increased about 100%, according to press reports. Brewery officials were predicting sharp initial sales declines.