The Excise Department is studying a restructuring of the entire vehicle excise tax, as it wants to gear measures to facilitate the use of electric vehicles (EVs) and reduce fossil fuel use in Thailand.
The idea of restructuring the entire vehicle excise tax will depend on the direction of the development of EVs in Thailand, said director-general Lavaron Sangsnit.
There is a government committee overseeing the systematic process of EV development in Thailand, including the development timeline and an approach leading to full use of EVs.
In the past, the department adopted excise tax measures aimed at supporting the outcome of government incentives while simultaneously helping to minimise the use of outdated technology and products that were not eco-friendly.
For example, an excise tax measure was used to encourage the use of four-stroke motorcycle engines to discourage the use of two-stroke engines, which created higher levels of air pollution.
Another example is different excise tax rates were applied to encourage the use of unleaded petrol in place of regular petrol.
Such policies nudged consumers to use products the government wanted to support, with those it wanted to avoid eventually disappearing from the market, said Mr Lavaron.
Other factors apart from excise tax policy can encourage widespread use of EVs in Thailand, he said.
These factors include the sales price and depreciation cost of EVs, both of which are higher than for cars powered by an internal combustion engine.
Mr Lavaron said the government could use funds from the Energy Conservation and Promotion Fund to subsidise the sales prices of EVs, but this would depend on government policy.
Investment in infrastructure to facilitate the use of EVs is also crucial, such as a power grid system and charging stations, he said.
Measures to promote EV use, such as having designated parking spaces for EVs, could also be adopted, said Mr Lavaron.
Automakers want clarity from the government on the tax promotion policy for eco-cars, as the policy is due to expire in 2025.
They want to know whether the government is continuing to support eco-cars, and which category of vehicles would fall under this tax incentive, along with any policy devised to promote energy-saving cars, he said.
The Excise Department needs to clarify the excise tax structure for cars before 2025 to give operators time to plan the direction of their business, said Mr Lavaron.
The current excise tax applied to EVs is 8%. However, for EVs that have been granted an investment promotion from the Board of Investment (BoI), a 2% excise tax rate is applied.
During the period Jan 1, 2020 to Dec 31, 2022, a 0% rate is applied under a BoI investment promotion.
The excise tax structure is classified within four vehicle categories: passenger cars with seats for no more than 10 people; pickups that are passenger vehicles, double cabs and space cabs; eco-cars and cars that use E85 and B10 fuels; and EVs.
The car excise tax structure is based on carbon dioxide (CO2) emission rates. If a car has low CO2 emissions, it is taxed less than a car that generates higher CO2 emissions.