The new excise tax structure on cigarettes is expected to increase the retail price of low-priced products by at least 6 baht per pack, said Excise Department Director General Lavaron Sangsnit.
The new two-tier tax structure, which was approved by cabinet on Tuesday this week, went into effect on October 1.
The structure applies a 25% tax on packs of cigarettes with a retail price of up to 72 baht, and a 42% tax on packs priced above 72 baht.
Packages are also subject to an additional tax of 1.25 Baht per cigarette regardless of the retail price. This means that a pack is subject to a tax of 25 baht, since there are 20 cigarettes per pack.
Mr Lavaron expects manufacturers of low-cost cigarettes to increase their retail prices to a range of 66 to 72 baht per pack, from the current 60 baht, depending on their costs and market competition.
Under the old two-tier tax structure, packs up to 60 baht were subject to a 20% tax, while those over 60 baht were subject to a 40% tax.
The packages were also subject to an additional tax of 1.20 baht per cigarette.
He said the new tax is expected to generate additional tax revenue of 3.5 billion baht per year for the department, on top of its existing cigarette excise revenue of around 62 billion baht per year.
The finance ministry had planned to apply a new flat tax rate of 40% since October 2019, regardless of the retail price, but several parties opposed the plan.
This prompted the ministry to postpone its application until September 30 this year to review the tax, before the new structure was approved by cabinet on Tuesday.