Prime Minister Prayut Chan-o-cha assigned the Finance Ministry and relevant agencies on Tuesday to study the possibility of extending the excise tax cut on diesel of 5 baht per litre, which is scheduled to end on July 20 this year.
According to Energy Minister Supattanapong Punmeechaow, Gen Prayut has entrusted the matter to the Finance Ministry to determine whether an extension is appropriate, based on a study that must first be submitted to the Election Commission, in accordance with the law.
Finance Minister Arkhom Termpittayapaisith said the ministry is in discussions with the Energy Ministry on a joint approach to support the tax cut, which expires on July 20.
If it is not feasible to proceed, Mr Arkhom said some advisors believe the Oil Fuel Fund mechanism could still be utilised through effective management to oversee the price of diesel.
The government has implemented measures to reduce the excise tax on diesel since February of last year, designed to ease the cost of living.
According to the Finance Ministry, the previous seven reductions in diesel fuel excise taxes by the government significantly affected state revenue collection, by up to 158 billion baht.
In May, Mr Arkhom refused to take a position on whether the diesel excise tax cut needs to be extended, saying it depends on global oil prices.
The measure allows for lower prices for consumers, particularly in terms of fuel and transport costs.
However, other factors must be considered including global oil prices and the state's Oil Fuel Fund, which has a loan framework in order to enhance the liquidity of the fund, he said.
According to Mr Arkhom, the status of the Oil Fuel Fund has improved as global crude oil prices have dropped, in line with the ministry's cut of the excise tax.
However, if global oil prices continue to decline, the ministry might have to reconsider its position in terms of extending the excise tax cut, he said.
The Oil Fuel Fund's financial status has significantly improved because of global oil prices.
Earlier the fund was in the red by more than 120 billion baht as a result of the diesel price subsidy programme, but now its losses have fallen to around 70 billion baht.
