Why ThaiBev is not bothered by new excise tax proposals

Wouldn't its profit margins be affected?

According to CIMB, the impact of the new excise tax calculation methods proposed on Thai Bev‟s profit margins is still uncertain.

However, they think that impact on margins is unlikely to change much, which means that both the specific and ad valorem rates applied to wholesale prices have to come down.

Here's more from CIMB:

We think that it is unlikely for this proposed policy to be applied at current tax rates. This will result in a dramatic hike in taxes, selling prices and a drop in Thai Bev‟s margins. Despite the theoretically higher tax revenue, we believe that it is not in the government‟s interest to do so.

Firstly, Thai Bev is a big tax revenue contributor and if its business suffers, it will pay lower taxes.

Secondly, and more importantly, a large increase in excise taxes at one go could lead to consumers increasing their consumption of black market spirits. This will lead to a loss in tax revenues.