Finance proposes excise tax restructuring to boost revenue by 7.6%, targeting 578 billion baht

The Ministry of Finance is preparing a proposal for the new government to restructure the excise tax system, aiming for a 7.6% increase in revenue for fiscal year 2026, reaching 578 billion baht.

This includes revising tax rates on various products, including a unified rate for cigarettes, adjustments to fuel and alcohol taxes, and the introduction of new taxes on health and environmental hazards, such as salt and carbon taxes.

Excise tax is a significant revenue source for the Thai government, contributing over 537 billion baht in fiscal year 2025.

The proposed changes are designed to improve tax collection efficiency and address health and environmental concerns, such as the introduction of a carbon tax and adjustments to taxes on high-pollution products like batteries.

Pornchai Teeravech, Director-General of the Excise Department, stated that the outlook for tax collection remains positive, following a 7.58% overachievement in Q1 of fiscal year 2026.

He also highlighted the importance of pushing for the pending excise tax law amendments, including the single rate for cigarettes, which would enhance both volume and value-based collection efficiency.

Further changes under consideration include raising taxes on alcoholic beverages, beer, and other "sin" goods, as well as tightening regulations on products that harm public health or the environment.

The department is also focused on improving tax collection for luxury goods and refining the regulatory framework to better capture these industries' tax contributions.

The government’s goal is to further stimulate the economy through increased excise revenues, with a strong focus on boosting consumption in the private sector and increasing investments.

The Excise Department has projected that measures like the unified cigarette tax rate will generate additional revenue from existing tax bases.

In the first four months of fiscal year 2026, excise tax revenue exceeded targets by 4.55%, reaching 191.3 billion baht, driven by strong consumer spending and a robust tourism sector during the holiday season.

Furthermore, the automotive sector contributed significantly to revenue, with vehicle-related taxes reaching 21.3 billion baht, surpassing targets by 1.16 billion baht. This surge was due to a rush in vehicle production before new emissions-based excise taxes took effect in January 2026, shifting sales towards electric and hybrid vehicles.

New excise tax rates on vehicles have led to increased interest in electric and hybrid cars, with taxes on these vehicles adjusted to encourage green alternatives.

Electric vehicles (EVs) benefiting from the EV 3.5 program will continue to receive tax reductions, while hybrid vehicles will see slight increases in excise rates.

Excise taxes on energy products, particularly oil and related products, remain a critical revenue stream, with oil-related taxes exceeding targets by over 4 billion baht. The excise on alcoholic beverages, including spirits and beer, has shown positive growth, with spirits taxes increasing by 18.79% year-over-year.

The Excise Department also noted improvements in inventory management through the Direct Coding system, which has streamlined operations and reduced production burdens while enhancing liquidity in the private sector.