Carbon tax at 200 baht per tonne in pipeline


Excise Department says the tax will encourage government and private sector to consider environmental impact of their operations

The Excise Department is proposing the collection of a carbon tax based on the emission of carbon dioxide by each fuel product to encourage more environmentally friendly operations.

Director general Ekniti Nitithanprapas said on Wednesday that the carbon tax, to be included in the excise tax of fuels, will serve as a mechanism that encourages government and the private sector to consider the environmental impact of their operations, and therefore promote more green practices.

He said the rate of the new tax in the initial phase will be 200 baht per tonne of carbon, which is roughly the same rate implemented in Singapore.

“This rate is in line with international rates and should not be a burden on the public in the long term,” he said. “Once it receives the green light from the Finance Ministry and the Cabinet, the new tax can be implemented immediately.”

Ekniti estimated, however, that the Finance Ministry may start collecting a carbon tax from fiscal 2025 as the government’s current priority is boosting the economy by providing tax benefits to industries.

He gave the example of a litre of diesel fuel, which will emit 0.0026 tonne of carbon dioxide. Therefore, 1 litre of diesel will be subject to carbon tax of 0.46 baht, on top of the 6.44-baht excise tax currently levied.

Ekniti said the private sector will benefit from this carbon tax initiative, as it will help prepare it for the European Union’s implementation of the Carbon Border Adjustment Mechanism (CBAM) in 2026. That mechanism aims to adjust the prices of certain imported goods before they enter the EU to deter goods that emit high levels of greenhouse gases.

“Thai industries that use diesel fuel already taxed for carbon will be able to use this tax to offset the adjustment, thus helping Thai products to compete more effectively in the global markets,” he said.

He added that in a bid to promote greenhouse-gas reduction, the department has already adjusted excise-tax collection from vehicles to reflect their environmental impact. 

He explained that the new model shifts from calculating excise tax based on a vehicle’s engine displacement to the amount of carbon emission it renders. For example, vehicles that emit more than 200 grams of carbon per kilometre will be subject to 35% excise tax, while those that emit less than 150 grams per kilometre will be taxed at only 25%.