Thailand’s new vehicle tax structure draws mixed reactions from auto industry

The new excise tax structure approved by the Thai Cabinet recently on vehicles based on carbon dioxide emissions elicited mixed reactions from the auto industry. An official announcement from the Excise Department on the Cabinet decision has not been made. Some companies have complained about the huge tax increase, although they recognize the environmental issues involved; others say the tax was expected, fair and has allowed for a reasonable time for adjustments.
Vehicles with engine sizes of more than 2,000cc, mostly pick-up trucks and hybrid cars, will have to pay higher taxes (some as much as double the present rates) when the new structure takes effect in 2016. However, the eco-car segment will enjoy further benefits, with a 3% reduction in excise tax.
Surapat Sirisuwannangkura, chairman of the Auto Industry Club, Federation of Thai Industries (FTI), said approval of the new tax structure was expected, but it would cause vehicle prices to increase. However, the current 17% tax on eco-cars will be lowered to 14% if they produce less than 100g/km of CO2, and to 12% if they can run on E85 gasohol.
Thai Automobile Manufacturers Association (TAIA) President Piengjai Kaewsuwan said the new excise tax structure is not surprising. “Surely, some companies may be dearly affected, especially those with newly launched pick-up truck models or those that are planning to launch a new model in the next 1-2 years, since the lifespan for a pick-up model is 8-9 years. This means that after just 2-3 years after the launch of a new model, automakers will have to invest further in technology so that their vehicles meet the CO2 standards,” she said. “Nevertheless, the government has consulted with specialists before coming up with these CO2 standards in order to best suit the Thai scenario, and we believe that every manufacturer knows about this so they have the time to prepare in advance,” Piengjai said (December 31, 2012)