carmakers urge excise, income tax cut

Auto-makers yesterday called for a 3-percentage-point cut in the excise tax for all types of vehicles plus a personal income-tax deduction of Bt50,000 per unit in a bid to boost domestic sales, which are forecast to shrink by 40 per cent this quarter.

The car industry had been expected to ask for a tax break of Bt100,000 per vehicle, but an industry source said that figure had been scaled back to Bt50,000 in order to persuade the Finance Ministry to approve both incentives for new buyers.

Industry Minister Charnchai Chairungrueng said all the proposals from the four automobile associations he met with would be considered by his ministry's committee and submitted to the economic ministers next Wednesday.

"We will agree with the tax deduction if consumers get the most benefit from it. However, they have to prove how much better sales will be after the tax is reduced," he said.

However, the main concern is workers, who may lose their jobs if auto-makers cannot boost production and sales.

Some 46,100 employees, out of the total of 350,000 working in auto-parts and auto-assembly plants, are at risk of lay-offs, Charnchai said.

The ministry will use Bt6.9 billion from the government's supplementary budget to support training courses for the unemployed in the automobile and other industries.

Permanent secretary Damri Sukhotanang said carmakers had asked the ministry to negotiate with financial institutions and banks to ease their conditions for granting leases and loans.

The firms also proposed the establishment of a national automotive development committee, chaired by the prime minister, as a collaboration between the public and private sectors.

Suparat Sirisuwanangkura, president of the Thai Automotive Industry Association, said the decline in automobile sales should continue into next quarter. Sales are believed to have crumbled by 40 per cent in January.

As senior vice president of Toyota Motor Thailand, Suparat said the Japanese carmaker's export orders from December to February had dried up sharply, for example, by 30 per cent from Australia and 60 per cent from Indonesia.

Toyota might terminate 300-400 more subcontract workers this year if the market situation does not recover. Of its 8,000 direct employees, subcontract workers accounted for 5,000 and permanent employees the rest.

The industry's output is expected to slump more than 25 per cent from 1.4 million units in 2008, leaving plants running at only 59.9 per cent of full capacity, he added.