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Thailand's government is evaluating the possibility of targeted reductions in fuel excise taxes on E20 ethanol and B20 biodiesel blends should energy prices remain elevated, Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas announced.
Speaking in an official statement on Monday, Ekniti outlined several policy tools under consideration, including leveraging the Oil Fuel Fund, encouraging oil refineries to absorb part of the retail price burden through excess refining margins, and reducing excise duties on selected fuel grades.
'Reducing fuel excise tax is another option if the situation warrants it,' he said.
The Finance Minister was responding to a proposal to deploy the remaining borrowing allocation—originally earmarked under measures to mitigate the impact of the West Asia crisis—toward supporting domestic fuel prices.
He noted, however, that the government had so far refrained from cutting excise taxes because any reduction would immediately erode state revenue, while expenditure commitments would remain unchanged.
'Ultimately, the government may have to borrow again to compensate for the lost revenue. Therefore, the impact on the country's fiscal position must be considered alongside any measures,' Ekniti said.
Should tax measures become necessary, he indicated that the government was leaning toward a more targeted approach by focusing on fuels such as E20 and B20, which contain relatively high proportions of ethanol and biodiesel respectively.
According to Ekniti, this approach would deliver benefits beyond lower pump prices by channeling support to Thailand's agricultural sector, as the ethanol used in E20 is derived primarily from sugar cane and cassava, while biodiesel is closely linked to palm oil.
'This would allow energy measures to also support the income of Thai farmers,' he emphasized.
Ekniti stressed that any measures aimed at easing cost-of-living pressures must be implemented alongside fiscal discipline, particularly as Thailand's current fiscal year ends this month. The country's remaining fiscal headroom stands at slightly more than 10 billion baht (approximately RM1.224 billion), making careful assessment of revenue-impacting measures essential.
'If measures that reduce government revenue are introduced without a comprehensive assessment of the resulting financial burden, the energy problem could spill over into a fiscal problem and become a crisis within a crisis,' he warned.
For the next fiscal year, Ekniti added, the government will reassess its available fiscal space before determining the scope of additional measures that can be introduced.
Source: Bernama