Scant CO2 tax impact seen

Scant CO2 tax impact seen

The new excise tax on motorcycles based on carbon dioxide (CO2) emissions will add a meagre 0.05% to retail prices if implemented, says the tax department chief.

The Excise Department will offer a six-month grace period for motorcycle makers to help adjust to the new excise tax structure, said director-general Krisada Chinavicharana.

The 0.05% tax on motorcycles will have a minimal impact on consumers, he said.

The new tax structure is aimed at encouraging manufacturers to upgrade their vehicles to be environmentally friendly, particularly in the cities.

The Excise Department, starting from January 2016, recalibrated the car tax, which was previously based on engine size, to CO2 emissions.

Under the current tax regime for cars, those with CO2 emissions of 100 grammes and lower per kilometre are taxed 25%; CO2 emissions of 100-150g/km are subject to a 30% excise tax; those emitting 150-200g/km are taxed 35%; and those producing more than 200g/km are charged 40%.

The new tax rates mean motorcycles sold in Thailand with higher CO2 emissions will be subject to higher tax rates and retail prices. Larger engine sizes typically release more emissions.

An informed source at the Excise Department said the tax-collecting agency is conducting a study of the new motorcycle tax.

The source said that if the tax is enforced, the levy will place a small burden on manufacturers and consumers.

The additional tax burden will be in a range of 100-200 baht per unit for motorcycles with engines sized up to 150 cubic centimetres (cc), the source said.

Motorcycles with an engine size of 150cc account for 85% of the Thai market.

At present, the Excise Department imposes a motorcycle tax based on engine size.

Motorcycles with engines not exceeding 150cc are subject to a 3% tax, those of greater than 150cc but less than 500cc are charged 5%, and those exceeding 1,000cc are levied at 20%.

The law caps the ceiling excise tax rate on motorcycles at 30%.

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