Finance Ministry weighs biofuel tax cuts and backs end to 14bn-baht earmarked levies

Thailand’s Finance Ministry is considering targeted excise tax cuts for E20 gasohol and B20 biodiesel as it seeks to support biofuels and ease pressure on the heavily indebted Oil Fuel Fund, while also signalling support for a legislative proposal to end about 14 billion baht a year in earmarked levies.

Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said on Thursday (October 22) that he had discussed possible fuel excise tax reductions with Energy Minister Akanat Promphan.

The proposal is consistent with the Finance Ministry’s policy of supporting renewable energy and biofuels, including E20 and B20, which would also benefit farmers producing sugar cane, cassava and oil palm used as feedstocks.

The government has previously identified targeted excise relief for E20 and B20 as one option for managing high energy costs while supporting domestic agriculture.

Tax cuts could preserve six-baht biofuel price gap

Ekniti said he would discuss the details and possible tax rates with the Excise Department director-general before any decision was made.

The objective is to help the Oil Fuel Fund maintain a price advantage of around 6 baht per litre for B20 and E20 compared with B7 diesel and E10 gasohol respectively.

Without additional support, higher global energy costs could push biofuel prices significantly higher and reduce the incentive for motorists to use fuels containing larger proportions of domestically produced ethanol and biodiesel.

“The principle is to help the Oil Fuel Fund maintain the price gap so that B20 and E20 remain around 6 baht per litre cheaper than B7 and E10,” Ekniti said.

Recent measures have already sought to widen the price difference between the fuels, with energy authorities keeping E20 and B20 prices unchanged during the latest retail adjustment.

Oil Fuel Fund deficit reaches 103.56bn baht

The proposal comes as the Oil Fuel Fund remains under severe financial pressure.

As of October 18, the fund recorded a net deficit of 103.561 billion baht, according to estimates from the Oil Fuel Fund Office.

It had assets of 36.201 billion baht against liabilities of 139.762 billion baht.

The oil account was 62.359 billion baht in deficit, while the liquefied petroleum gas account was 41.202 billion baht in deficit.

The deteriorating position has increased pressure on the government to find alternatives to further borrowing, including tax measures, adjustments to refinery prices and greater use of biofuels.

Ekniti backs principle of ending earmarked levies

Ekniti also addressed four proposed legislative amendments currently undergoing public consultation under Section 77 of the Constitution.

The proposals would end additional levies linked to excise duties on alcohol and tobacco that currently provide dedicated funding to four organisations and funds.

Around 12–14 billion baht a year is channelled through the existing arrangements to the Thai Health Promotion Foundation, or ThaiHealth, Thai Public Broadcasting Service, the Older Persons Fund and the National Sports Development Fund.

Instead of automatically receiving money through the earmarked mechanism, the four would have to seek funding through the annual government budget.

Ekniti stressed that the proposal originated from the legislative branch and was separate from executive authority.

However, if the Finance Ministry were formally asked for its opinion, he said it would be inclined to support the principle of ending earmarked taxation.

“I think if they ask the Finance Ministry for its view, we would agree with this,” Ekniti said, referring to Section 26 of the State Fiscal and Financial Disciplines Act and its emphasis on limiting earmarked revenue.

The proposal has generated opposition from civil-society organisations, which argue that moving the funding into the annual budget could affect the independence and continuity of the organisations involved.

Finance Ministry to review medium-term fiscal plan

Ekniti said the ministry would also revise Thailand’s Medium-Term Fiscal Framework for fiscal 2027–2030 to reflect the latest revenue and fiscal data.

According to the figures he cited, the fiscal 2026 budget deficit came in at around 3.4% of GDP, lower than the 4.4% previously projected, while government revenue collection also exceeded estimates.

The Finance Ministry plans to discuss the revised framework with the Budget Bureau in November.

Ekniti said stronger-than-expected revenue could allow Thailand to reduce its budget deficit to no more than 3% of GDP earlier than the fiscal 2029 target set under the existing medium-term plan.

The current fiscal framework had originally targeted a reduction in the deficit from 4.4% of GDP in fiscal 2026 to 3% by fiscal 2029.

Stronger tax revenue could improve debt outlook

Ekniti also addressed a National Economic and Social Development Council assessment that Thailand’s public debt could move above the 70% of GDP ceiling in fiscal 2028.

The NESDC’s baseline scenario estimates public debt could peak at about 70.05% of GDP in fiscal 2028 before declining in subsequent years.

Ekniti said the latest fiscal position could prove stronger than previously expected because fiscal 2026 tax revenue exceeded the target, particularly value-added tax generated by domestic consumption.

A better revenue performance and a revised fiscal framework could therefore improve the future debt trajectory, he said.

The minister added that discussions at the 33rd APEC Finance Ministers’ Meeting in Hong Kong had underscored the importance countries are placing on economic stability amid continuing global volatility.

For Thailand, he said, maintaining fiscal discipline and macroeconomic stability would remain central as the government balances measures to cushion high energy costs with the need to protect public finances.