The Excise Department is currently drafting a proposal to decrease the tax on diesel fuel by 2 baht per liter with the aim of reducing the retail price of diesel to below 30 baht per liter, in line with the newly formed government’s objectives.
This proposal comes after Prime Minister Srettha Thavisin’s announcement to cut the retail price of diesel from the current cap of 32 baht per liter to 30 baht per liter. The Excise Department is presently gathering data on the reduction of diesel tax to present to both the Ministry of Finance and the prime minister.
Preliminary discussions suggest a plan to reduce the current diesel tax of 6 baht per liter by 2 baht per liter, in accordance with government policy. However, this decision will require consultations with the Ministry of Energy and the Oil Fuel Fund Office to determine how the reduced tax will be utilized, whether to decrease fuel prices for the public or to alleviate the burden on the Oil Fund.
The Excise Department estimates that a 1 baht reduction in diesel tax per liter would lead to a monthly tax revenue loss of 2 billion baht. If the tax is reduced by 2 baht per liter, the monthly revenue loss would amount to 4 billion baht. According to the department, this rate is deemed acceptable and is lower than the previous government’s reduction of 5 baht per liter in diesel tax. The duration of this reduction is still under discussion as a matter of policy.
The previous government had approved diesel tax reductions on seven occasions, resulting in a total tax loss of over 158 billion baht. These reductions occurred as follows:
- First reduction: From February 18 to May 20, 2022, a reduction of 3 baht per liter, resulting in an 18 billion baht loss.
- Second reduction: From May 21 to July 20, 2022, a reduction of 5 baht per liter, resulting in a 20 billion baht loss.
- Third reduction: From July 21 to September 20, 2022, a reduction of 5 baht per liter, resulting in a 20 billion baht loss.
- Fourth reduction: From September 21 to November 20, 2022, a reduction of 5 baht per liter, resulting in a 20 billion baht loss.
- Fifth reduction: From November 21, 2022, to January 20, 2023, a reduction of 5 baht per liter, resulting in a 20 billion baht loss.
- Sixth reduction: From January 21 to May 20, 2023, a reduction of 5 baht per liter, resulting in a 40 billion baht loss.
- Seventh reduction: From May 21 to July 20, 2023, a reduction of 5 baht per liter, resulting in a 20 billion baht loss.
