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Bangkok Post
Bangkok Post
Business

Prospects for diesel tax cut extension remain unclear

Vehicles line up to fill their tanks at a petrol station on Nawamin Road in Bangkok.  (Photo: Varuth Hirunyatheb)

The Excise Department is still uncertain whether it can extend the diesel excise tax cut under the interim government, says director-general Ekniti Nitithanprapas.

He said the department is evaluating whether the interim government can extend the diesel tax cut of 5 baht per litre, which is scheduled to expire on July 20, 2023, or if it must wait for the formation of a new government.

"I cannot say whether the tax cut extension is possible as we are waiting for the legal department to study the details, especially the 2017 constitutional law," said Mr Ekniti.

In addition to the diesel tax cut extension, the new government must decide on the excise tax on cigarettes, liquor and beer, as well as an environmental tax.

The department collected 313 billion baht in revenue during the first eight months of fiscal 2023 (October 2022 to May 2023), falling short of the target by 65.7 billion baht, attributed to the diesel excise tax cut.

According to the Finance Ministry, the previous seven reductions in the diesel excise tax by the government had a significant effect on state revenue collection, by as much as 158 billion baht.

Based on preliminary considerations of the 2017 constitutional law, the interim government is unable to approve extending the diesel tax cut because it would have a binding effect on the new government, according to some pundits.

As the Election Commission recently approved the elected members of the House of Representatives, it should be left to the new government to decide on this matter, said a Finance Ministry source who requested anonymity.

Whether the tax cut is extended should not affect retail oil prices as global crude prices have dropped from US$100 per barrel to $75.

The Oil Fuel Fund's financial status has significantly improved because of the trend in global oil prices.

The fund was 120 billion baht in the red as a result of the diesel price subsidy programme, but losses have dwindled to around 60 billion.

The fund must manage its income and expenses to help maintain the current retail price of diesel, ensuring it will not affect diesel users, said the source.

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