Move to extend diesel tax exemption

The government will extend the de facto tax exemption on diesel until the end of March, Finance Minister Kittiratt Na-Ranong said yesterday. The ultra-low tax of 0.005 per cent on the retail price of diesel has been scheduled to expire at the end of this month, but the government is worried about the impact that would have on the cost of living, so it will extend the exemption, he said.

Deputy Finance Minister Tanusak Lekuthai said the ministry would propose to the Cabinet a plan to raise the excise on diesel, but not so much as to affect the cost of living significantly. 

The tax exemption was introduced by the previous Democrat-led coalition government, aimed at keeping the diesel price below Bt30 per litre. The exemption cost the government about Bt9 billion a month in lost tax revenue. 

Tanusak said the ministry would also negotiate with oil traders on reducing their marketing margin, which should provide some cushion for a tax hike.

He said the Excise Department had to collect more tax, as revenue missed the target last month largely because of the diesel exemption and a drop in car sales due to last year’s flood disaster. 

The department collected total tax of Bt111.11 billion in the first four months of the current fiscal year, he said. Major tax sources were cars, generating revenue of Bt23.14 billion, and beer, providing Bt22 billion. 

In another development, the Finance Ministry will ask state-run banks to reduce interest rates for borrowers with good records, he said. About 5 million bank customers would benefit from such a scheme. The proposal will be submitted to the Cabinet next week. 

This package is part of the government’s previous plan to allow bank borrowers to suspend their debt payments for three years. Beneficiaries of this plan must not have debt of more than Bt500,000 owed to state banks. 

They will be excused payments on both interest and principal during the period. The government will subsidise these state banks under the programme.

The Finance Ministry is also studying whether to allow the Government Lottery Office to sell lottery tickets online, Tanusak said.