Diesel subsidy possible if excise tax cut ends
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Diesel subsidy possible if excise tax cut ends

Oil Fuel Fund Office seeks ways to stabilise pump prices amid volatile global conditions

An attendant at a petrol station fills a pickup truck with diesel. (Photo: Varuth Hirunyatheb)
An attendant at a petrol station fills a pickup truck with diesel. (Photo: Varuth Hirunyatheb)

The Oil Fuel Fund Office (Offo) says it will continue to subsidise retail diesel prices if the government decides to end the diesel excise tax cut.

The tax cut of one baht a litre is scheduled to expire on Friday, but the issue was not raised at the cabinet meeting on Thursday.

If and when the tax cut is scrapped, a subsidy would help cushion the effects of oil price fluctuations, as Middle East tensions are expected to drive up global crude prices, said Wisak Watanasap, the Offo director.

He did not reveal the amount of any new subsidy sourced from the dwindling fund.

The fund had an accumulated loss of 104 billion baht as of April 8, after using 56.4 billion to subsidise diesel, gasohol and gasoline prices, as well as 47.2 billion for subsidies for liquefied petroleum gas.

Authorities are currently spending 4.77 baht a litre from the fund, in addition to the one-baht excise tax reduction, to keep diesel prices in check.

The normal excise tax rate on the fuel is 6 baht a litre.

A government vow to keep diesel prices below 30 baht a litre led to a subsidy programme that officially ended on March 31. Diesel prices have since increased to 30.44 baht a litre from 29.94 baht at the start of the month.

Budget update

In a related development, the cabinet on Thursday approved the latest reviewed expenditure budget framework for fiscal 2025, with the total budget set at 3.75 trillion baht, a 7.8% increase from the fiscal 2024 budget of 3.44 trillion.

The 2025 budget includes a deficit of 866 billion baht, up 24.9% from the figure earmarked for 2024.

The government expects net revenue of 3.45 trillion baht in 2025, up 3.6% from 2024.

Regular expenditure amounts to 2.73 trillion baht, up 7.7% from fiscal 2024, accounting for 72.9% of the total budget.

Investment expenditure stands at almost 866 billion baht, up 21.9% and accounting for 23.1% of the total budget. Expenditure for repayment of loan principal is 150.1 billion baht, an increase of 26.9% from 2024, accounting for 4% of the total budget.

Fiscal 2025 starts on Oct 1, 2024.

The government expects the country’s gross domestic product (GDP) to grow in a range of 2.8% to 3.8% in 2025 (with an average of 3.3%), supported by continuous export growth in line with an economic recovery, expansion of private consumption and investment, as well as the recovery of tourism.

However, there are still significant limitations and risks from prolonged geopolitical conflicts that may affect the global economy and create fluctuations in the money and capital markets, including declines in fiscal stimulus in the future.

The government expects inflation to stand at between 1.1% and 2.1%, with an average of 1.6%.

The House of Representatives is scheduled to hold the first reading of the 2025 budget draft on June 5 and 6.

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