Following the resolution of the Cabinet, the Excise Department issued a ministerial directive, which took effect from February 18 to May 20, to reduce the excise tax on diesel oil by Bt3 to Bt3.2 per litre.

The source said there is almost a month before the current tax cut period would expire and the global oil price situation may already improve by that time. In that scenario, the excise cut would not be necessary.

The source explained that the Russia-Ukraine war has continued for over 60 days. During the first period of the war, the global oil prices rose to US$120-130 per barrel and gradually declined to the current price of US$105 per barrel. The source said the oil price was not expected to rise more than the current level but it expected to go down after the war situation eased.

The source said if the Finance Ministry had to extend the excise cut, the cut would be Bt1.50, not Bt3 as in the current practice.

Apart from the excise cut, the government also had the Oil Fund subsidize the retail price of diesel at the rate of 50 per cent for the price that is higher than Bt30. Without the tax cut and partial subsidy, the diesel price would have risen to Bt38 per litre from Sunday, the source added. On Sunday and Mondy, diesel oil retails for Bt31.94 per litre.

So far, the government has lost its revenue by Bt17.1 billion from the excise tax cut for diesel from February 18, the source said.

Fortunately, the government could offset the loss of revenue from revenues from state enterprises that had better performance than expected, the source added.

If the government extends the cut on diesel excise tax, it would have to look for other sources of income to meet its target income of Bt2.4 trillion this year, the source said.

Initially, the Excise Department projected revenue from oil excise tax for 2022 at Bt200 billion. But when the government cut the diesel excise for three months, the department lowered its projected income from oil tax to Bt180 billion, the source said.