Excise chief flip-flops as department rejects 50% tax cut
The Excise Department has turned down car makers' proposed 50% tax cut, fearing prices of all vehicles in the market will decline further if the reduction is implemented, the department's chief says.
Lowering taxes to boost domestic car sales is inappropriate because there could be a knock-on effect on all cars, said Patchara Anuntasilpa, director-general of the Excise Department.
He said the 50% tax cut could slash prices of new commercial pickups by 2,000 baht and city cars by 30,000 baht per unit.
"Automakers are offering larger discounts than the proposed tax cut," Mr Patchara said. "Intervening in the market by cutting taxes is not suitable, as all cars prices will be brought down."
Mr Patchara's remarks yesterday were considered an about-face after he earlier threw his support behind the tax-cut proposal, saying it could be a win-win for all.
The Federation of Thai Industries (FTI) automotive club had proposed three assistance measures, comprising a 50% excise tax reduction until the end of this year, a car trade-in scheme in return for 100,000 baht paid by the state, and a delay in enforcement of Euro 5 emission standards after the pandemic took a severe toll on demand and purchasing power.
According to FTI data, car production slid 83.6% from a year earlier and 83.2% from the preceding month to 24,711 units in April. For the first four months of the year, Thailand had total auto capacity of 478,393 units, a 32.8% year-on-year decrease.
Excise tax on cars contributes about 100 billion baht a year to the department. Assembled cars are not subject to excise tax until they leave assembly plants or tax-free zones.
The other two FTI proposals are under the Industry Ministry's purview.
Mr Patchara said local media reports about the tax-cut proposal have already dealt a blow to automakers and dealers because those who planned to buy cars have delayed their decisions.
Suparat Sirisuwanangkura, vice-chairman of the FTI, agreed with the Excise Department, saying the tax-cut proposal was raised hastily and without thorough consideration.
Car makers are simply anxious to preserve the industry's supply chain and keep their 700,000 employees, Mr Suparat said.
New-car sales are expected to be fewer than 500,000 units this year, falling far short of the 1-million-car target for this year, he said.
The Finance Ministry has offered some assistance measures to the auto industry by enabling them to defer excise tax payments.
Pinyo Thanawatcharaporn, chairman of the Association of Used Car Thailand, applauded the Excise Department's decision.
Used-car operators suffered for years after the tax rebate scheme for first-time car buyers came into force years ago, as used-car prices fell significantly.