Charter drafters to review proposal on funding with 'sin' tax

Kamnoon Sidhisamarn, a member of National Reform Council (NRC) and CDC spokesman said yesterday that he had consulted with other constitution drafters on the controversial issue, and acknowledged there was confusion regarding the levies among some panel members.
Besides Kamnoon, at least three other NRC members have voiced opposition to the proposal to end public funding of these agencies with the earmarked tax.
Under the 2001 Thai Health Promotion Foundation Act, the foundation is empowered to collect a 2-per-cent levy on top of the taxes paid on sales of alcoholic beverages and cigarettes, while the 2008 Thai PBS Act imposes an additional levy of 1.5 per cent on such sales, although the amount must not exceed Bt2 billion per year.
Kamnoon said some members of the charter-drafting committee had initially misunderstood the situation and supported a proposal to prohibit the use of the earmarked taxes in the new constitution with a view to boosting the country’s fiscal discipline.
Both THPF and Thai PBS in fact get the additional money levied on top of the taxes on sales of alcoholic beverages and cigarettes, so any ban on such a levy has nothing to do with the Finance Ministry’s coffers, he stressed.
“It [banning the additional levies] would only benefit liquor, beer and cigarette companies. We will review the proposal at two levels. First, we could consider excluding the THPF, Thai PBS and probably the proposed sports promotion fund in the proposal permanently, instead of giving these existing agencies just four years to prepare for the end of public funding.
“Second, we will review the wording in the new charter. Instead of banning the use of earmarked taxes, we could emphasise the importance of fiscal discipline [since proponents have argued that the growing use of special levies undermines the country’s fiscal integrity].
“Previously, we misunderstood that these so-called earmarked taxes were deducted from the Finance Ministry’s taxes collected from ‘sin’ products, but in fact that’s not the case. So we don’t think the state will get more benefit from this proposal. On the other hand, public organisations like the THPF and Thai PBS will take the hit,” said Kamnoon.
As well as Kamnoon, NRC members Prasarn Marukpitak, Rosana Tositrakul and Winai Dahlan called for a review of the proposal to amend Article 190 and 204 of the interim charter to stop funding the THPF and Thai PBS directly with “sin” taxes, with funds for the organisations being allocated from the fiscal budget instead.
Rosana said the purpose of funding the two agencies with sin-tax income was to battle against foreign corporates that produce liquor and cigarettes, as such companies had a strong influence on politicians to reduce funding for the agencies.
She cited other agencies such as the National Sports Development Fund that received funding approval by the National Legislative Assembly as possibly also facing their funds being slashed by politicians.
Prasarn said the THPF had been able to reduce the consumption of cigarettes by Bt13 billion, and of liquor by Bt17 billion.