The Royal Thai government sets the excise tax on ex-factory price, not on sale price, therefore importers tend to report lower ex-factory price or CIF price than the real price.
High excise tax on cigarette also induces cigarette smuggling and production of counterfeit cigarettes. The Government recently established a multi-sectoral committee for the prevention and control of cigarettes smuggling following the last tax increased.
Very low taxes have resulted in high affordability of RYO tobacco, and it is roughly estimated that the cost of a RYO cigarette is about one tenth that of a manufactured cigarette. The low taxes and price of RYO tobacco has prevented a fall in tobacco consumption in rural areas, where most of it is consumed. Indeed, the prevalence of tobacco use in municipal areas is 16.4% compared with 23.4% in rural areas. Given the large populations in rural areas, it is found from surveys that about half of the tobacco consumed in Thailand is RYO which is almost untaxed. A number of studies have recently been conducted to provide evidences for raising tax on RYO tobacco. Improvement of RYO taxation is one of the important activities under the 2010-2014 National Tobacco Control Strategies and Work Plan.