Thai government weighs extending diesel excise tax cut beyond July

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The Thai government is considering extending the excise tax cut on diesel, which is set to expire on July 20. Prime Minister Prayut Chan-o-cha directed the Finance Ministry and other relevant agencies to evaluate the feasibility of prolonging the tax reduction.

Energy Minister Supattanapong Punmeechaow revealed that the Finance Ministry has been tasked with determining the appropriateness of an extension. This decision will be based on a study that must first be submitted to the Election Commission, in compliance with the law.

Finance Minister Arkhom Termpittayapaisith confirmed that the ministry is in discussions with the Energy Ministry on a joint approach to support the tax cut. If it is not feasible to continue, Arkhom mentioned that some advisors believe the Oil Fuel Fund mechanism could still be utilised through effective management to oversee diesel prices.

The government implemented measures to reduce the excise tax on diesel in February of last year, aiming to ease the cost of living. The Finance Ministry reported that the previous seven reductions in diesel fuel excise taxes significantly impacted state revenue collection, amounting to a loss of up to 158 billion baht.

In May, Arkhom did not take a stance on whether the diesel excise tax cut should be extended, stating that it depends on global oil prices. Lower prices for consumers, particularly for fuel and transport costs, are the intended outcome of the measure. However, other factors, such as global oil prices and the state’s Oil Fuel Fund, must be considered.

Arkhom noted that the Oil Fuel Fund’s financial status has improved due to the drop in global crude oil prices, which is 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 regarding extending the excise tax cut, reported Bangkok Post.

The Oil Fuel Fund’s financial status has significantly improved because of global oil prices. Previously, the fund was in the red by more than 120 billion baht due to the diesel price subsidy programme, but now its losses have decreased to around 70 billion baht.

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