Treasury may not extend diesel fuel tax exemption after July 20
The Treasury may not extend the diesel fuel tax exemption after July 20, which would push diesel prices above 37 baht per litre at the pumps.
According to sources at the Energy Ministry, the Treasury Department may not extend the diesel fuel tax exemption of 5 baht per litre to avoid absorbing further financial losses while the new Thai coalition government is being assembled.
Meanwhile, the Oil Fuel Fund Office (OFFO) has borrowed money to shore up its financial position and has already received 50 billion baht from the Public Debt Management Office (PDMO), which it has used to pay off trade debts under Article 7.
The total amount of public debt has reached 110 billion baht, with the first round of borrowing amounting to 30 billion baht since the end of 2022. The second round involves an additional 20 billion baht from the total loan amount of 80 billion baht, leaving a remaining loan amount of 60 billion baht, which is currently being processed for a new round of borrowing.
Although in this current borrowing process, the Cabinet has given approval to the Ministry of Finance to guarantee a loan not exceeding 150 billion baht, the PDMO believes that given the falling global energy prices, a loan of 110 billion baht should be sufficient. It is also felt that the new government should take any decision.
As of May 21, the Oil Fund's deficit stands at 72.73 billion baht, divided into a negative oil account of 26.11 billion baht and a negative LPG (liquefied petroleum gas) account of 46.62 billion baht, which exceeds the oil account. This is due to the current use of the Oil Fund to support the average monthly cost of LPG cooking gas LPG, which amounts to approximately 600 million baht.
Moreover, according to the source, the Energy and Finance ministries have to base any decision in anticipation of the future government's policies and who will manage energy prices. And with the Energy Ministry’s Permanent Secretary Kulit Sombatsiri retiring this year, a decision will have to be made as to whether the Petroleum Fund continues to manage oil prices or not.
Praipol Koomsup, former dean of the Faculty of Economics at Thammasat University, said that the government should carefully examine the financial accounts of both the Oil Fund and the diesel tax reduction. If further tax reduction measures are implemented, it will affect the country's income. Personally, he believes that if the government does not implement additional tax reduction measures, the diesel fuel price should gradually increase by 1 baht at a time, rather than an immediate increase of 5 baht.
A news report from the Ministry of Energy indicated that the cumulative impact of the diesel tax reduction measures, which have occurred seven times, has resulted in a loss of state revenue amounting to 158 billion baht, as follows:
1. February 18 - May 20, 2022 (3 months): Excise tax reduction of 3 baht per liter, resulting in a state revenue loss of 18 billion baht.
2. May 21 - July 20, 2022 (2 months): Excise tax reduction of 5 baht per liter, resulting in a state revenue loss of 20 billion baht.
3. July 21 - September 20, 2022 (2 months): Excise tax reduction of 5 baht per liter, resulting in a state revenue loss of 20 billion baht.
4. September 21 - November 20, 2022 (2 months): Excise tax reduction of 5 baht per liter, resulting in a state revenue loss of 20 billion baht.
5. November 21, 2022 - January 20, 2023 (2 months): Excise tax reduction of 5 baht per liter, resulting in a state revenue loss of 20 billion baht.
6. January 21 - May 20, 2023 (4 months): Excise tax reduction of 5 baht per liter, resulting in a state revenue loss of 40 billion baht.
7. May 21 - July 20, 2023 (2 months): Excise tax reduction of 5 baht per liter, resulting in a state revenue loss of 40 billion baht.
