Fuel tax reduction necessary

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The price of oil is a notorious headache for governments around the world. Today Prime Minister Prayut Chan-o-cha is looking for the pill bottle, as the global price of oil has risen sharply from US $ 20 a barrel last year to over $ 80 this week.

Hopefully the government will be able to fix this problem. Otherwise, it could end up in ruins with the country. The price issue became more of a concern this week when “Truck Power”, the transport group of the Land Transport Federation of Thailand (LTFT), started protesting on their way to the capital. Members threatened to cut working hours if their demand that the price of diesel be set at 25 baht per liter was not met.

They left empty-handed after the government refused and insisted on setting the price of diesel at 30 baht per liter. The government also ignored its recommendation to immediately reduce the additional cost of 5 baht by reducing taxes or fees collected from oil sales.

They’re right. It is high time the government revamped energy taxes and royalty collections, instead of sticking to the old game plan of relying on money from the Oil Fuel Fund or borrowing from the oil fuel fund. ‘State to keep energy prices low.

The government is running out of money to subsidize energy prices. It has spent more than 50 billion baht to keep the price of cooking gas low during the last 18 months of the Covid pandemic and it will spend billions to cap the price of diesel at 30 baht per liter.

Now, with the Petroleum Fund having only enough money for subsidies until the end of this year, the Energy Ministry is preparing to borrow 20 billion baht to subsidize diesel, and another sum for keep the price of cooking gas low. It is time for the ministry to try a new method as it may reduce energy costs.

For a liter of oil, at least 30% of the cost consists of taxes and fees collected. Thus, the Department of Energy can try to reduce oil prices by reducing perceived marketing costs or even by reducing the use of energy crops as additives.

If this does not work, a reduction in the excise duty cannot be ruled out. This is exactly what the government of Abhisit Vejjajiva did a few years ago.

But the ministry insists on the use of additives for energy crops simply because it is committed to promoting the use of biofuels in the transport sector.

Critics, including the LTFT, say the ministry is bleeding too much money from the Oil Fuel Fund to subsidize energy crops such as palm oil and ethanol, despite the expensive unit price of this alternative energy.

The government gave good subsidies to farmers. In 2018, he used the fund’s money to buy palm oil that will be used as fuel in power plants, just to help support the price of palm oil.

The policy could be good to promote renewable energies and energy crops. Today, palm oil additives are seen as expensive and burdensome, so policymakers need to be prepared to make adjustments.

Without flexibility, this government will fail the oil price test, which hurts the country in the process.

Editorial

Bangkok Post Editorial Column

These editorials represent the Bangkok Post’s reflections on current issues and situations.

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