Discuss new C02 tax structure before implementation
August 03, 2012 00:00
By Pattanadesh Asasappakij
Last week there was big news in the Thai media concerning our automobile industry and the forms of energy to be used in the future.
It was also related to the country’s mass transportation and logistics system.
The big news last week revealed that the Excise Department – which is under the Finance Ministry – is planning to announce a new excise-tax structure which is based on vehicle carbon dioxide (CO2) emissions.
The Excise Department says this system is based on the one used by the European Union, but automobile producers (mainly members of the Thai Automobile Industry Association) do not agree. They say the system proposed by the Excise Department is not the correct way to go.
Auto-makers also complained that the proposed grace period is too short and it does not give them enough time to adjust production. This will result in a halt in the automobile industry at a time of tremendous growth.
I have been invited a few times to seminars by other organisations and each time I’ve stood on the opposite side of the Excise Department’s proposal.
This has led to many people, who did not catch the whole seminar, asking why I don’t agree with the idea of taxing automobiles according to CO2 levels.
First of all, I admit that I agree in principle with the proposal of curbing pollution. Thailand is part of the global community and when the whole world joins hands in curbing global warming, our country must head in the same direction.
However, the intensity of the laws is something that the government needs to carefully consider.
In reality, the majority of the Thais are not well off. So if stricter laws controlling emissions are passed, automobiles will become more expensive. They will become so expensive that low-income people, who form the majority, would be unable to afford them. They would be forced to use older vehicles that cause more pollution.
The stricter rules also mean that the fuels for use in these automobiles must be of higher quality, and that means an increase in retail prices.
Another result of a CO2-based tax structure is that manufacturers will turn towards producing more CNG (Compressed Natural Gas) vehicles, since they produce much lower CO2 than gasoline or diesel engines.
But Thailand still has problems concerning CNG in terms of pricing and the number of stations, resulting in long queues every day.
So if a new law is to be passed, it has to be considered whether automobiles produced in Thailand have high enough CO2 emissions that could cause problems for the country and the automobile industry.
Pickup trucks and small passenger cars from Thailand are exported to more than 100 countries, and this hints that vehicles produced here carry emission levels that are globally acceptable.
However, CO2 laws can and should be imposed, but the time frame has to be carefully considered so that the production cost of automobiles remain competitive in the global market – and not cause any problems for domestic buyers. Even the UU, which has one of the strictest emission laws in the world, offered a grace period of 10 years so that the industry has enough time to adjust, as much time was also needed in Japan during the same transformation.
Meanwhile, another reason why I cannot accept the Excise Department’s measures or proposals is the way in which the CO2 level will be imposed. As far as I know, the department wants to use just one CO2 level for all sizes of vehicles.
This is actually not how things are done in Europe. I found out that in Europe, CO2 emissions will be calculated in relation to the vehicle weight, engine type and other factors. It doesn’t use just one standard for all vehicle types because it will cause advantages and disadvantages.
These are some of my reasons concerning the proposed CO2 excise tax regulation. I stress once again that I agree with the proposal in principle, but I don’t agree with the way it will be implemented, especially when every party is not ready and taking into account the calculation method of the Excise Department.
If new laws are to be passed for the benefit of the public, the government and all the manufacturers must sit down and discuss the matter. Once they come to an agreement, they must make it public, and tell the people of the advantages and disadvantages, as well as the need for implementing the new law. This is how it should be done so that it benefits everyone in the country.