The cabinet on Tuesday agreed to cut the excise tax on diesel by 3 baht per litre, from 5.99 baht currently, for three months to help mitigate the impact of high energy prices, deputy finance minister Santi Promphat told reporters.
The cabinet approved a draft decree to cut the tax from February to April, a source at Government House said. It would take effect after publication in the Royal Gazette.
The move came on the expiration day of a seven-day ultimatum set by truckers to reduce the high prices.
On Feb 8, the Land Transport Federation of Thailand (LTFT) brought about 50 heavy lorries to the Energy Ministry on Vibhavadi Rangsit Road to pressure the government to cap the diesel price at 25 baht per litre for one year.
LTFT chairman Apichart Prairungruang said the group demanded the sacking of Energy Minister Supattanapong Punmeechaow over the high price of diesel – currently 29.94 baht per litre.
The Excise Department now collects diesel excise tax of 5.99 baht per litre – totalling 12 billion baht a month or 144 billion baht per year – from the country’s monthly diesel consumption of approximately 2 billion litres.
The government source said Finance Minister Arkhom Termpittayapaisith, Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow and executives of concerned agencies had discussed the proposal to cut the tax.
The Finance Ministry had expressed concern about the impact of the tax cut on the Excise Department’s revenue and on state coffers in general because excise tax on diesel is a major source of income, the source said. The government would then have to seek revenue from other sources to offset it.
The tax cut will reduce revenue by 17 billion baht but that should be partially offset by a rise in other tax revenue as the economy is recovering, Finance Minister Arkhom Termpittayapaisith later told a news conference.
"The tax is necessary as the government has extended the cap of diesel prices at 30 baht per litre until the end of May," he said.
But the country's oil fund, which stabilises domestic prices, is still unable to borrow 30 billion baht as earlier approved by the cabinet, Mr Arkhom said.