Thailand: Diesel tax cut likely to be extended

The Finance Ministry is expected to ask the cabinet to extend the diesel excise tax reduction until the end of this year to ease people’s living costs, according to a ministry source who requested anonymity.

The source said the ministry is considering the details of maintaining the existing diesel excise tax reduction of 5 baht per litre for the rest of 2022, while another option is to cut the tax by 3 baht per litre during these months.

The source said the ministry is highly likely to conclude that the current tax cut should be kept in place.

In July the cabinet approved an extension of the excise tax reduction on diesel by 5 baht per litre for two months, running from July 21 until Sept 20.

This followed an earlier cabinet approval of an extension to the tax cut until July 20.

The government decided in February to cut the tax by 3 baht per litre, down from 5.99 baht per litre, from Feb 18 to May 20.

Earlier, Finance Minister Arkhom Termpittayapaisith said the government would continue to use tax measures to subsidise high energy prices throughout the year to ease people’s rising living costs.

Cutting the diesel excise tax three times this year has cost the state around 68 billion baht.

If the tax cut continues, the measure is expected to cost the country almost 100 billion baht.

The government’s revenue collection is expected to exceed its target by 40-50 billion baht in fiscal 2022. The source said the government will spend this excess on the diesel tax cut.

In related news, Excise Department director-general Ekniti Nitithanprapas said the department has deployed digital technology to bolster its crackdown on illegal sales of subsidised diesel.

The department cut the combined excise tax and value-added tax on diesel for fishing boats by 10 baht per litre. The office later found there have been sales of this cheap diesel to unqualified parties.

As part of the efforts to prevent illegal transactions, both the fishing boats and the tankers selling this cheap diesel to them will now have to register with the department, he said.

The tankers and boats are obliged to install an automatic identification system on board.

The system, which is linked to a satellite, tracks their locations to see which boats bought diesel from the tankers.

A total of 600 million litres of this cheap diesel is consumed each year, which costs the government 4 billion baht annually.