Bottled green-tea makers lobby against excise tax

Ready-to-drink green-tea beverage makers yesterday urged the government to reconsider the imposition of an excise tax on ready-to-drink green tea, saying it would hurt both the green-tea beverage industry and farmers.

The Finance Ministry is considering imposing an excise tax of 10-20 per cent on ready-to-drink green tea next year, according to permanent secretary Rangsan Srivorasat.

Tan Passakornnatee, president and CEO of Ichitan Group, said an excise tax should be conducted fairly on all beverages that were exempted previously. Any unfair practice would affect the competition among those beverages, impacting individual farmers.

Tan said the overall green-tea beverage market is worth more than Bt10 billion per year. The manufacturers purchase at least 10 million kilograms of green-tea leaves from farmers each year.

“For Ichitan, we purchase about five million kilograms of green tea leaf from local farmers per year. It covers more than 20,000 farmer households at the green tea planting fields in Chiang Rai,” he said. 

The claim raised by the Food and Drug Administration (FDA) that there is little green tea leaf extract in ready-to-drink green tea beverages is not true, he said. In the production process, all operators need to follow the rules and regulations identified by the Excise Ministry, that all green tea beverages must contain not less than 1.5 per cent of caffeine in their weight, as well as no less than 0.5 per cent of fruit or vegetable juice in their net volume. 

“This issue has been stated several times for years. Nevertheless, Ichitan [insists] every bottle of Ichitan products strictly contains the amount of tea as determined by the Excise Department. Subsequently, Ichitan receives a full exemption from the tax and also support from the BOI. With the production of RTD Tea, more than 10 million kilograms of tea leaves are utilised in each year,” said Tan. 

Those natural tea leaves are derived from local farmers in northern areas, generating significant incomes to tens of thousands of families. For other types of Ichitan drinks containing fruit juices, the level usage is not less than 10 per cent, which follows excise regulations. Prior to launching, every product will also be submitted to recheck the tea amount with the Excise Department and they will randomly test those goods in the market every month.

“If the Ministry of Finance decides to cancel the original regulation and considers applying a new directive for collecting the tax, Ichitan as a private company will be willing to fully cooperate. To be fair, other beverage categories, such as coffee and juice, should be included under this new consideration, regardless of the operator size,” said Tan.

Meanwhile, Aniruth Mahathorn, Oishi Group executive vice president, said that the increase in excise tax on ready-to-drink green tea would have a negative impact on the industry as operators would be burdened by higher costs. Consumers in return would move to other beverage substitutes.

“With slowing growth in the ready-to-drink green tea sector, green tea farmers will be impacted significantly as we [the operators] are using several tonnes of green-tea leaf a day. We want to urge the government agency to make careful consideration before any increase in excise tax is placed on green tea beverages,” said Aniruth.