Auto industry calls for delay in new carbon tax

business October 27, 2015 01:00

By The Nation

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KEY PLAYERS in the automotive industry have urged the government to postpone restructuring excise taxes on cars and trucks based on their CO2 emissions.

When a 2012 Cabinet resolution becomes effective on January 1, 2016, automobiles releasing more than 200 grams of CO2 per kilometre will be taxed at a rate of up to 40 per cent of a vehicle’s price compared to only 17 per cent for those classified as eco-friendly models.

During yesterday’s first “Prime Minister Meets CEOs” event at Government House, top executives at Mazda and Ford producer AutoAlliance and the CEO of Mazda Sales Thailand told Prime Minister Prayut Chan-o-cha that carmakers need another two or three years to adjust to the new tax structure due to the ongoing domestic auto market slowdown.

The latest figures show that Thailand’s overall auto sales dropped 14.6 per cent in the first nine months compared to the same period last year.

If the tax restructuring is enforced as planned on January 1 next year, the auto market in Thailand would likely face a big contraction due to higher production costs and prices of vehicles, according to the CEOs who met with the prime minister and other economic ministers.

Deputy Premier Somkid Jatusripitak said the Prime Minister had instructed Finance Minister Apisak Tantivorawong to consider the auto industry’s request.

As a result of higher excise taxes, many new cars and trucks in Thailand will become more expensive next year unless they are eco-friendly cars and release CO2 less than 100 grams per kilometre.

On its investment plan in Thailand, Mazda executives said the company will go ahead with the plan to invest in a new engine factory in Rayong.

They also said Thailand is positioned as one of Mazda’s four production facilities worldwide for exports to European, Australian and Asean markets.

Deputy Premier Somkid said the government will consider expanding transport infrastructure on the Eastern Seaboard and Rayong to accommodate the factory expansions of the automotive industry and other industries.

The infrastructure expansion includes the land transport link with the deep-sea port, he said.

Besides Ford and Mazda, Prayut and the economic ministers also met top executives from Mitsubishi Motor, Seagate Technology, Mitsubishi Electrics and Thai Samsung Electrics as the government hopes the “Prime Minister meets CEOs” events will help boost foreign investor confidence in Thailand.

Also at the meeting were three economic ministers – Industry Minister Atchaka Sibunruang, Commerce Minister Apiradi Tantraporn and Deputy Commerce Minister Suvit Maesincee.

Prayut said the government is implementing policies to strengthen Thailand on the world stage and urged multinational companies to expand their investments in the country.

Prayut also told the CEOs that Thailand is accelerating negotiations with other countries to push ahead the Regional Comprehensive Economic Partnership – free trade agreement covering the 10 Asean nations as well as China, Japan, Korea, India, Australia and New Zealand.

He said the Commerce Ministry is conducting a detailed study on the pros and cons of joining the US-led Trans-Pacific Partnership, another free trade agreement.