E85 compatible cars excise tax deduction

Automakers and the Office of Industrial Economics (OIE) have voiced objection to the excise tax deduction for E85compatible cars being less than 25 per cent.

They said setting the tax too low would distort the overall automotive industry, including investment in ecocars.

Speaking at a seminar entitled "The Thai Automotive Industry and E85" jointly held by the Thailand Automotive Institute and the Thai Automotive Journalists Association, OIE directorgeneral Atchaka Sibunruang Brimble said manufacturers of E85com¬patible cars would shoulder about US$150 (Bt5,200) per unit as the premium cost at an excise rate of 25 per cent.

If the excise tax on E85compatible cars were lower than 25 per cent, other types of passenger cars would lose their competitiveness in the market. She said ecocar investment would no longer be attractive if the gap in excise tax was less than 8 per cent.

"We need to plan well. If our goal is to push ecocars as our second product champion, we must be careful not to tax E85compatible cars at too low a rate. Otherwise, the price of ecocars will not be competitive enough," she explained.

The excise tax for E85compatible cars is now 25 per cent, the same as for E20compatible cars. Meanwhile, the excise tax on ecocars is 17 per cent, but ecocar man¬ufacturers must accept Board of Investment conditions, such as an ecocar must consume less than 1 litre per 20 kilometres and engine emissions must meet the Euro 4 standard.

"The sudden change in tax structure is unfair for automakers, which produce other types of vehicles, including ecocars, E20compatible cars and pickups. It will also show the uncertainty of our policy, which will ruin foreign investors' confidence," she said.

Toyota Motor Thailand vice chairman Ninnart Chaitheerapinyo agreed the government should keep the current tax structure, in order to avoid a domino effect on the automotive industry.

He said it was necessary to draw up a clear national energy road map for 15 years and identify appropriate use of each fuel.

For example, passenger cars consume gasohol, pick¬ups and lorries biodiesel and buses and taxis compressed natural gas.

Sukrit Surabotsopon, assistant managing director for strategic planning and business development at Thai Oil, said the promotion of alternative fuels would part¬ly make domestic demand for crude oil fall. However, oil refineries can shift their supply to exports, although the export price would be about $2abarrel lower than the domestic price.

"Although our revenue from refining oil may decrease slightly, we still support the consumption of alternative fuels in Thailand," he said.

Thai Oil has entered into a joint venture with Phadaeng Industry and Mitr Phol to set up an ethanol plant in Tak province, with a daily production capaci¬ty of 200,000 litres. The plant will be completed this year.