The new vehicle excise tax based on carbon dioxide emissions will raise tax revenue by 5-10 billion baht in 2016. This amount will gradually wind down as car makers improve the CO2 emissions of their vehicles.
Somchai Pulsawas, director-general of the Excise Department, said the higher revenue will mostly come from vehicle models that are unable to improve their CO2 emissions yet.
"Under the new structure some models could be taxed less than the current excise tax based on engine size if they can cut emissions," said Mr Somchai.
From 2016, vehicles sold in Thailand will be subject to an excise tax based on CO2 emissions, E85-gasohol compatibility and fuel efficiency rather than engine size.
The excise tax for passenger cars with CO2 emissions 150 grammes per kilometre or below will be 30%, but higher emissions will require a higher tax.
The most affected segment is likely to be one-tonne pickup trucks. If this class does not exceed 200 gm of CO2 per km, these trucks can remain at the current 3% tax rate. But as no model has been able to improve emissions to lower than 200 gm per km, they will be charged a 5% excise tax rate.
The higher tax for pickup trucks will cost 20,000 to 30,000 baht per vehicle.
Eco-cars are required to emit less than 100 gm per km, lowering their tax rate to 12-14% from 17%. The 10% excise tax rate for hybrid vehicles will remain.
Next year Thailand projects 2 million vehicles will be produced, shipping 1.2 million and selling the rest locally, up from 700,000 local sales this year.
For fiscal year 2016 starting on Oct 1, the Finance Ministry set an excise tax revenue target of 496 billion baht, 57 billion higher than 2015. However, the 2016 target will be reviewed as it was based on the petrol excise tax being raised one baht a litre to 5.25 baht, but the government delayed the rise because of the economic slowdown, causing a shortfall of 20 billion baht.