Vehicle tax overhaul studied to promote green fuels

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Thai vehicle tax overhaul studied 
Bangkok Post: 18 Jan 2011
Vehicle tax overhaul studied to promote green fuels

The Excise Department has proposed an overhaul of vehicle taxes to promote alternative fuels and reduce emissions, although tax revenue would remain at the same level in the long term.

Director-general Pongpanu Svetarundra insisted a restructuring would have no effect on revenue. Instead, the new rates would help support the government-backed projects such as eco-cars.

"The current tax rate is biased and unfair for some items. Taxation should be used as a tool to support government policy while being fair to consumers," said Mr Pongpanu.

At present, there are 40 different excise tax rates on vehicles, depending on engine size and purpose of use. But some smaller-engine passenger cars face higher rates than luxury high-horsepower vehicles.

Current rate calculations are based mainly on engine size on the theory that larger engines consume more fuel than do smaller ones.

However, Mr Pongpanu said new technologies meant that newer models, even those with large engines, consume less fuel than do small engines designed with outdated technology.

"That's why we should also consider emissions factors and not engine size alone," said Mr Pongpanu.


"There's also a problem with older cars that cannot run on alternative fuels such as gasohol but instead must use fossil fuels such as petrol," he added.

The existing tax rate on passenger cars is 30% for engines smaller than 2,000cc and 50% for those larger than 3,250cc.

However, only 20% for passenger pickup vehicles with engines smaller than 3,250cc.

That means a 500,000-baht city car is subject to 30% tax while a more expensive one-million-baht Fortuner faces only 20%.

A senior government official said the distortion in the tax rates had resulted in carmakers manipulating government policy in their favour.

The existing rates are biased in favour of light pickup trucks, which has led to Thailand becoming one of the world's largest markets for these vehicles.

However, the official said that even though they may be unfair, the rates have actually ended up benefiting development of the industry - for example, through modified double-cab pickup trucks becoming a major export product.

http://www.bangkokpost.com/business/economics/216899/vehicle-tax-overhaul-studied-to-promote-green-fuels