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Published on August 15, 2007

The Cabinet yesterday approved the cut proposed by the Excise Department, effective next January 1, said deputy director-general Somchai Apiwattanaporn.

The tax cut is expected to lower the price of cars by at least Bt10,000. A car with cylinder capacity of no more than 2,000cc and no more than 220 horsepower will be taxed at 25 per cent, down from 30 per cent. Cars with a capacity of no more than 2,500cc and no more than 220hp will be charged at 30 per cent, down from 35 per cent. And cars with a capacity of more than 2,500cc but no more than 3,000cc and 220hp will be taxed at 35 per cent, down from 40 per cent.

The rates apply to passenger cars and vans with fewer than 10 seats.

Manufacturers must guarantee the vehicles can be powered by at least 20-per-cent ethanol mixed with petrol. Officials said manufacturers like Toyota and Honda would launch this type of car next year.

The new duty rate is designed to boost consumption of ethanol, which can be produced locally, and reduce oil imports. Promotion of ethanol is also expected to benefit sugar-cane farmers.

The Excise Department estimates that about 30,000 new vehicles powered by ethanol will be in the market next year.

Although the new excise rate is lower than the normal rate, it is higher than for cars powered by natural gas, which attract 20 per cent.

Wichit Chaitrong

The Nation