The finance ministry is considering a proposal from government officials to cut the diesel excise tax by 5 baht per litre when the current tax cut expires on May 20.
The goal is to tame rising inflation, said a ministry source who requested anonymity.
The ministry believes the Russia-Ukraine war will continue, keeping the global oil price elevated. It sees revenue losses as worthwhile if it can ease the public’s cost of living, said the source, adding that rising inflation is currently the most pressing issue.
The Fiscal Policy Office last month forecast this year’s headline inflation would surge to 5%, far higher than the 1.9 percent it estimated in January.
The office recently downgraded its 2022 economic growth forecast to an average of 3.5 percent from a previous estimate of 4%, mainly because the impact of the Russia-Ukraine war has affected Thai trading partners and pushed up energy prices as well as the inflation rate.
However, the office believes the Thai economy is on course to recover based on rising domestic consumption and the easing of entry restrictions.
The government decided to cut the excise tax for diesel by 3 baht per litre, from a total tax of 5.99 baht per litre, from February 18 to May 20 to ease inflationary pressure on the public and private sectors.
The tax cut has cost the Excise Department around 17.1 billion baht in total.
A reduction of the diesel excise tax by 1 baht a litre is estimated to cost the government around 1.9 billion baht a month.
Finance minister Arkhom Termpittayapaisith said earlier he was confident the government would meet its revenue target of 2.4 trillion baht in fiscal 2022.
During the first six months of fiscal 2022, the government’s net revenue stood at more than 1.09 trillion baht, exceeding its target by 68.8 billion. This was the result of the Revenue Department’s better than expected tax collection.
During this period, the department collected 852 billion baht, up 15.6 percent from the same period last year and 13.5 percent higher than the target.
The Excise Department’s tax revenue collection in the same period was 267 billion baht, 5.8 percent lower than the target, mainly as a result of the diesel tax cut.
Permanent finance secretary Krisada Chinavicharana said the ministry is considering launching Phase 5 of the “Khon La Khrueng” co-payment subsidy scheme, in line with the prime minister’s policy.
Krisada said the ministry needed a clearer view of the country’s revenue collection and the impact of the scheme on the fiscal status before proposing details for the premier’s consideration.