Cabinet races to cut oil tax as fuel shock hits Thailand
Thailand unveils emergency relief after a 6-baht-per-litre fuel hike, with the Cabinet pushing oil tax cuts and wider aid to ease the crisis
Cabinet has approved a set of urgent measures to tackle the escalating energy crisis, including exploring legal avenues to reduce fuel excise taxes following a sharp 6-baht-per-litre increase in oil prices.
The special Cabinet meeting on March 26 came as the government moved away from its previous gradual pricing approach, instead implementing an immediate increase due to mounting pressures, including the deepening deficit of the Oil Fuel Fund, fuel shortages and illegal cross-border smuggling.
Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said the meeting endorsed measures to align Thailand’s energy management with the global crisis, which has been driven by conflict in the Middle East.
He said the prime minister had instructed relevant ministers and permanent secretaries to urgently implement relief measures, despite the government currently operating in a caretaker capacity. Legal constraints will be addressed by the Council of State to ensure timely implementation within the legal framework.
Ekniti also called for strict energy-saving measures across government agencies, local authorities and state enterprises, including suspending non-essential overseas travel.
Push for fuel tax cuts
Permanent Secretary for Finance Lavaron Sangsnit said the Finance Ministry is studying reductions in fuel excise tax rates and their duration as a key mechanism to ease living costs.
Currently, excise tax stands at 5–6 baht per litre, meaning any reduction would immediately lower retail prices. The measure would complement the Oil Fuel Fund, which is currently subsidising diesel at around 19 baht per litre.
However, legal limitations under the caretaker government mean any tax reduction must be approved by the Election Commission, and could be restricted to short-term measures to avoid binding the next administration.
Seven relief measures approved
The Cabinet approved seven key measures to cushion the impact of rising energy costs:
1. Fuel tax reduction
The Finance Ministry will consider cutting excise tax rates, subject to legal review and consultation with the Election Commission.
2. Welfare support boost
State welfare card holders, covering 13.5 million people, will receive an additional 100 baht per month, raising the allowance to 400 baht for one month.
3. Transport sector aid
Support will target truck operators, public transport services and motorcycle taxi drivers affected by rising fuel costs.
4. Agricultural support
Measures include subsidised fertiliser programmes and promotion of alternative and organic fertilisers to reduce reliance on imports.
5. Fisheries assistance
Fishermen will be supported through access to lower-cost B20 fuel, priced 5–6 baht below regular diesel.
6. Support for contractors
The government will consider extending project deadlines and accelerating compensation payments for contractors affected by fuel shortages.
7. SME soft loans
The Government Savings Bank will provide 10 billion baht in soft loans to boost liquidity for small businesses across supply chains.
Energy officials defend price hike
Energy Permanent Secretary Prasert Sinsukprasert said the decision to raise fuel prices by 6 baht per litre was difficult but necessary due to the severity of the situation.
He noted that fuel consumption had surged by around 20% due to hoarding and smuggling to neighbouring countries where prices are higher.
Prasert added that it remains uncertain whether fuel prices could reach 50 baht per litre, as this will depend on how the global situation evolves.
Targeted transport and price controls
Transport Permanent Secretary Chayatan Phromsorn said assistance will be “targeted” using GPS data to ensure support reflects actual fuel usage, with payments made via PromptPay.
Meanwhile, the Commerce Ministry has added seven more items to the controlled goods list, bringing the total to 66, including plastic pellets, bottled water and seasoning sauces.
Authorities have also tightened price controls on essential goods, requiring prior approval before price increases, and launched nationwide campaigns to distribute discounted products to ease the cost of living.
Officials said the government will continue to monitor the situation closely and introduce additional measures as needed to mitigate the impact on households and businesses.
