Thailand has toughened the proposal of reducing car tax

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Recommend 50% special consumption tax on cars was the Thai authorities denied.
Thailand has toughened the proposal of reducing car tax
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Patchara Anuntasilpa, head of the Special Consumption Tax Administration (under the Ministry of Finance of Thailand), explained that the tax reduction to stimulate domestic demand for cars is not appropriate, because it can affect all Vehicles on the market. In particular, a 50% reduction in excise taxes could cause new pickup models to offer a discount of 2,000 baht (VND 1.5 million) and urban vehicles to 30,000 baht (VND 22 million).

"Carmakers are applying discounts, discounts higher than tax breaks," Mr Patchara said. "Intervening in the market by reducing taxes is inappropriate, because the price of all cars will fall."

Patchara’s explanation is completely opposite to the previous statements, supporting the tax reduction, saying that this is a mutually beneficial solution.

Facing the gloomy market caused by the Covid-19 epidemic, the as‌sociation of Thai Industries (FTI) proposed three solutions to support the automobile industry to overcome the difficult period. The first is a 50% reduction of excise taxes until the end of this year. The second is to launch a program to exchange used cars for new cars with a support of 100,000 baht from the government. And finally, a proposal to delay the application of Euro 5 emission standards.

According to FTI data, April automobile production in Thailand has decreased by 83.6% compared to last year and by 83.2% compared to the previous month, to only 24,711 cars. In the first 4 months of this year, the country’s automobile output reached 478,393 vehicles, down 32.8% over the same period last year.

Each year, excise taxes contribute about 10 billion baht to the budget.

The other two FTI proposals are being reviewed by the Thai Ministry of Industry.

Mr Patchara said that the fact that the media reported on the proposed reduction of excise tax had affected the business activities of carmakers and dealers because people were planning Car purchases have been postponed to wait for tax breaks.

Suparat Sirisuwanangkura, FTI Vice President, agreed with the Special Consumption Tax Administration, saying that the proposed tax reduction was hastily made and needed careful consideration.

Car manufacturers are too worried about the spare parts supply and job security for 700,000 workers.

The consumption of new cars in the Thai market this year is forecast at less than 500,000 vehicles, much lower than the target of 1 million units.

The Thai Ministry of Finance has introduced a number of measures to support the automobile industry, by delaying the deadline for paying excise taxes to businesses.

Pinyo Thanawatcharaporn, president of the Old Thai Automobile as‌sociation, also welcomed the decision of the Special Consumption Tax Administration.

Old auto businesses in Thailand have been affected for many years after the first-ever tax rebate program for car buyers began four years ago, because the price of used cars dropped sharply.

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