The Treasury is preparing to levy carbon taxes on oil, tying them to criteria for releasing carbon dioxide emissions.

They propose a standard rate of 200 baht per ton of carbon, ensuring it doesn't adversely affect the public. If the green light is given to proceed immediately, they are ready to present this to the Cabinet for consideration.

On June 5, 2024, Ekniti Nitithanprapas, Ph.D., the Director-General of the Excise Department, revealed that the department is currently proposing to the Ministry of Finance to consider the approach to implementing a Carbon Tax. This tax mechanism will compel businesses and all relevant sectors to pay more attention to environmental concerns. If the Ministry of Finance deems it feasible, they will prepare to present it for further consideration at the Cabinet meeting.

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To register as a farmer and ensure you don't miss out on state aid. For carbon taxes, international standards will be used for calculations, and it will be ensured that the initial implementation does not impact the public. It will also immediately create a carbon pricing mechanism in Thailand. In the initial phase proposed by the department, the carbon tax will be set at 200 baht per ton of carbon, which will be considered a benchmark price and a collection rate like Singapore's.

The carbon tax coordinates will be inserted into the oil excise tax. For example, the current oil excise tax for diesel is 6.44 baht per liter, and the carbon tax will be linked to carbon dioxide emissions. Diesel fuel emits approximately 0.0026 tons of carbon dioxide per liter. Therefore, when calculated, diesel fuel of about 1 liter will incur a carbon tax of around 0.46 baht per liter.

"The tax rates used initially must not impact the public. This is a requirement set by the Ministry of Finance because, in the past, the department has handled this issue before. Previously, car taxes were based on engine size, but now it has shifted to carbon dioxide emissions. For example, a car that emits more than 200 grams of carbon dioxide per kilometer will incur a 35% tax. However, if it emits less than 150 grams of carbon dioxide per kilometer, the tax will be 25%.

The department has interpreted this directly as being tied to carbon dioxide emissions in oil. The department can proceed without new legislation because we already have oil taxes. If this can be implemented, Thailand will become the second country in ASEAN to implement Carbon Tax after Singapore," Mr. Ekniti stated.

Furthermore, private entities will also benefit from this carbon tax implementation, as in 2029, Europe will begin collecting Carbon Border Adjustment Mechanism (CBAM) taxes as a price-adjustment measure for certain imports before entering the European Union, aimed at preventing imports of high greenhouse gas-emitting products.

Therefore, if Thai industries such as Thai steel mills use diesel fuel that already includes carbon taxes in the steel smelting process, and the department is negotiating with relevant agencies to allow them to deduct the carbon tax from this diesel fuel, it will help Thai entrepreneurs compete more effectively in the global market.

However, the Ministry of Finance wants to start implementing carbon taxes in the fiscal year 2025 and acknowledges that initially, the revenue from carbon taxes may not be substantial. This is because the government's policy is not to negatively impact the public. Currently, the department's role is not just revenue collection but also assisting the public. This is evident from the reduction in oil tax collection, which has caused the department to lose revenue of 20 billion baht per month.

Similarly, the measures to reduce taxes to support the electric vehicle (EV) industry have led to a significant expansion of the EV industry by up to 685% in the past year. This has also increased investments in the country. Currently, car manufacturers have signed Memorandums of Understanding (MOUs) with the department to receive tax benefits in the EV industry, totaling 22 companies with investments exceeding 80 billion baht. This has also helped Thailand reduce carbon dioxide emissions by 240,000 tons per year, which can be considered as offsetting the lost tax revenue.

Reference: Prachachat Business Online