Extra revenues could help limit fuel price rises
Chiang Mai: Any surpluses in the country's revenues could be spent to fund the kingdom's diesel subsidy initiative and keep fuel prices down, according to Finance Minister Arkhom Termpittayapaisith.
He was speaking during a forum on how to stimulate the economy organised by the Federation of Thai Industries in Chiang Mai yesterday.
Mr Arkhom said if revenues this year exceed targets, surpluses could be used to extend the diesel excise curb.
The subsidy, introduced on May 21 and set to last until July 20, reduces the price of diesel by 5 baht.
Whether the reduction will continue depends on the country's revenues. The kingdom aims to earn a total of 2.4 trillion baht this year.
The finance minister said that in the first five months of this year, revenue collection surpassed targets.
This was due to effective collection measures stemming from the availability of electronic tax payment channels and the increased taxing of e-services offered by foreign-based platforms.
Diesel subsidies have been implemented from time to time as the government monitors volatile energy prices in the global market. The reductions must reflect the rise and fall of energy prices.
The Finance Ministry must consider how much money is left in state coffers and worldwide energy prices, which are likely to remain high, before deciding as July 20 nears, Mr Arkhom said.
"We have to assess where we stand in terms of revenue," he said. "If we can meet the revenue target, we can then channel the surplus [to prop up the excise reduction]," he said.
But if the reduction is to remain in place, it will have to be targeted toward people most affected by the surge in energy prices, rather than being offered across the board, he said.
Also, the government is pressing ahead with its plan to have local oil refineries reduce their gross refining margins (GRMs) to cushion the impact of rising energy prices on consumers.
Talks with refineries over the issue are underway.
Mr Arkhom said the government will discuss workers' minimum wage with businesses at the end of the year, as the most recent rise in daily wage cannot keep up with inflation.
During normal times, private businesses may hold out on raising the prices of consumer goods in the wake of inflation. But given the current runaway inflation rate of between 6 and 7%, businesses may be experiencing a shock.
But if they can properly manage basic costs, they may avoid pushing up the prices of their products, Mr Arkhom said.
While the country's inflation rate is high, it is lower than that of many other countries, he noted.
The Trade Policy and Strategy Office reported earlier this month that headline inflation hit 7.1% in May, accelerating from 4.7% in April.
Mr Arkhom said the government has adopted consistent fiscal and financial measures to stimulate the economy as people's income has slumped due to the Covid-19 pandemic.
He said that 60–70% of the 1.5 trillion baht which the government borrowed, obtained via two emergency decrees, was disbursed as financial relief.