Tax cuts won't dent revenue
The country is likely to meet its revenue collection target despite the excise tax on diesel being halved for three months, said Finance Minister Arkhom Termpittayapaisith on Friday.
The cut from six to three baht per litre is to help ease the impact of high energy prices on the cost of transport and consumer goods, but with diesel excise tax being one of the main contributors to state coffers there are concerns about the impact on the country's revenue.
The Excise Department estimates it will lose about 17 billion baht from the tax cut. It collects diesel excise tax of 5.99 baht per litre -- totalling 12 billion baht a month -- from the country's monthly diesel consumption of approximately 2 billion litres.
Mr Arkhom said an assessment will have to be made on how much more revenue the cut generates through increased economic activity, and whether that can offset the direct losses in tax, he said, adding revenue collection will be closely monitored on a monthly basis.
He also noted the government has introduced a package of incentives including tax cuts and subsidies to promote electric vehicle (EV) consumption and production between 2022-2023.
With economic growth forecast to hit 4% this year, there is a good prospect of meeting the revenue collection target, according to Mr Arkhom.
"Revenue collection in the first four months [of the fiscal year, starting in Oct 2021] is higher than the same period last year. Although the difference isn't that much, it doesn't pose a concern because the tax cut is to help people," he said.
Lavaron Sangsnit, director-general of the Excise Department, said the department should still meet its revenue collection target of 560 billion baht despite the tax cut on diesel.
He said the revenue collection target for fiscal 2022 has been revised down to 560 billion baht from 597 billion baht after it decided to delay tax reforms.
He also gave assurances that the department would not be introducing new taxes or increase existing taxes to compensate.
The lockdown measures introduced to curb the spread of the Covid-19 pandemic have also affected consumption and eaten into the department's revenue, he said.