Excise tax parity pursued

Excise tax collected from liquefied petroleum gas (LPG) for the transport sector is expected to increase over the next several months.

But Energy Minister Narongchai Akrasanee said the tax collected from LPG for household and industrial use and petrochemical feedstock would remain unchanged.

The new tax rate on motorists who drive LPG vehicles should rise to be on a par with rates imposed on diesel and petrol motorists, he said.

“LPG vehicles have worn out roads just the same as vehicles that run on diesel and petrol, so the tax rate should be kept at a fair and equivalent rate,” Mr Narongchai said.

The current excise tax rate collected from LPG users is fixed at 2.17 baht a kilogramme compared with 1.17 baht a litre.

That is well below the 5.04 baht a litre collected from gasohol 95 users and the 4.25 baht a litre for diesel users.

The Energy Ministry’s Energy Business Department plans to collect excise tax through a smart-meter system to prevent profiteering and smuggling.

The new tax rates will be put in place after a new excise tax act has been amended by the National Legislative Assembly.

Mr Narongchai said the new excise tax on fuels would be based on the heat rate of each fuel type.

LPG’s heat rate is roughly 30% below that of other fuels, presumably resulting in a lower tax, so energy policymakers must figure out a fairer method.

An Energy Ministry source said the new tax rate of LPG would be between 3.80 and 4.20 baht a litre if the calculation were based on heat rate.

Under the country’s gas plan for 2015-36, tax and levy collection from compressed natural gas (CNG), LPG and oil are to reach parity.

A clear direction on specific rates, however, has yet to emerge.

CNG is becoming a mainstream fuel for heavy trucks due to a subsidy scheme from national oil and gas firm PTT Plc.

Its retail price is fixed at 12.50 baht per kg.

Meanwhile, the Energy Policy Administration Committee yesterday kept the monthly benchmark retail LPG price unchanged at 12.95 baht a litre or 23.96 baht per kg even as the global LPG monthly price declined by US$50 a tonne to $419.