A Study of Efficient Formulation of Excise Tax Policy on Tobacco in Thailand

Abstract

The study of the effectiveness from the excise tax structure for tobacco in Thailand is a particular significance. The Tobacco Authority of Thailand (TOAT) as a state-owned enterprise suffered a loss of sales. For instance, in 2018 as the first year after the cigarette tax restructuring, the total cigarette sales fell 15%, but the sales dropped 36%. This situation indicating that this decline in sales was about 10,300 millions of cigarettes. In addition, the Tobacco Authority of Thailand’s market share had consecutively declined from 79% in 2017 to 60% in 2018, 58% in 2019, and 55% in 2020. Therefore, a correct policy formulation that truly reflects the positive effects on government revenue collection will contribute to economic development. This study extends the results of important tobacco research under econometric effects in order to propose a truly efficient design of tax structures.