Government can adopt more reforms to make Thailand a tourism hub, following tax cuts for some alcohol

Economy News Thursday March 7, 2024 11:19 —

Government can adopt more reforms to make Thailand a tourism hub, following tax cuts for some alcohol

The Thai government can pursue broader measures to achieve its goal of making Thailand a tourism hub by 2030, following the recent tax cuts on wine and community liquors, say industry observers.

In a welcome move to rejuvenate tourism, the Excise Department recently cut tax on some categories of alcoholic beverages, including excise tax on wine, ad valorem rate being halved from 10% to 5%, and the excise tax on community liquors, ad valorem rate being eliminated from 10% to zero, effective on 23 February 2024. Excise tax imposed on entertainment values is also set to be halved from 10% to 5% for this year.

However, industry experts say these tax measures might have benefits limited to only a few product categories, recommending that further reforms be introduced to drive domestic recovery and growth of the hospitality, food and beverage (F&B) and tourism sectors, including benefitting local entrepreneurs, employees and government revenue.

Khemika Ratanakul, President of Thai Alcohol Beverage Business Association, said, "We commend the Thai government for its positive move to reduce taxes for wine and community liquors, which would significantly enhance their growth opportunity, and allow F&B and tourism operators to offer goods and services at a much more competitive and affordable price point. In addition, this initiative will lead to healthy growth of the alcohol industry while supporting the government's strategy to strengthen soft power through tourism and food, of which alcoholic beverages are a key part. The tax cut will shortly be offset by increased revenue from growth of demand for wines and community liquors and greater capability and profitability of businesses along the supply chain including retail, F&B, restaurants, tourism and hospitality.

"The next phase to drive the government's goal of making Thailand a diverse and premium tourist destination is to implement the regulatory guillotine to enable ease of doing business and to meet expectations of international travelers who are looking for increasingly premium, seamless and memorable food and beverage experiences. Those regulations include the 2 p.m. ? 5 p.m. alcohol sales ban, zoning regulations and advertising restrictions. While we are looking forward to a balanced alcohol control policy, the alcohol industry is committed to promoting responsibility culture, such that people are aware of the impact from harmful use of alcohol and to Drink Better, Not More."

Aligned to Prime Minister Srettha Thavisin's ambitious plans to make Thailand a hub for tourism and food by 2030, the Thai government is focused on promoting the country's unique culture through soft power, of which food and beverages are an integral ingredient. This is reaffirmed by the Tourism Authority of Thailand (TAT)'s priority to attract high-value tourism.

Marisa Sukosol Nunbhakdi, President of Thai Hotels Association, said, "Soju is one of the soft power products from Korea and I believe Thailand can do the same with our local alcohol. Yet, tourists are often not impressed when they come into Thailand and realise the cost of alcohol is high or that they cannot purchase alcohol in the afternoon. They often complain that cocktails in Thailand are more expensive than in their home country. Another regulation that impacts hotels is the ban on advertising alcohol, which prevents us from advertising happy hour, an important part of how we generate revenue."

According to a new research report by Oxford Economics launched in Thailand last month, international wine and spirit sales and distribution deliver a sizeable economic contribution to Thailand, including USD 198 million (6.9 billion baht) to GDP in 2022, increasing by USD 24 million (0.8 billion baht) from 2021. This supported 20,500 jobs and generated USD 292 million (10.0 billion baht) in tax revenues in 2022. Titled "International Wine and Spirits in ASEAN: The Economic Contribution of the International Wine and Spirits Value Chain in Thailand and Vietnam", the report by Oxford Economics was commissioned by the Asia Pacific International Spirits and Wine Alliance (APISWA) to assess the economic impact of international wine and spirit sales and distribution in Thailand and Vietnam.

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