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Oil crisis prompts plan to tax fuel users, sinners
The Nation (20 Aug 2004)

THAILAND: Smokers, drinkers massage-parlour clients to suffer as well as motorists

The Excise Department will draw up measures to tax heavy fuel users and increase "sin" taxes, Finance Minister Somkid Jatusripitak said yesterday.

The measures aim to create incentives for energy conservation and to hit heavy petrol users.

Somkid suggested the department increase taxes in a progressive manner depending on the amount of fuel consumed, but he gave no specifics on how surcharges would be collected.

He said the department should also review taxes for all unnecessary goods like cigarettes, liquor and even Turkish bath massage parlours.

"The people who cannot bathe themselves must pay heavier taxes. Even by the name you know those places are beyond necessity,'' he said.

The department imposes fixed excise taxes of Bt3.6 per litre of petrol and Bt2.3 for diesel. Heavy fuel users, which he defined as people or families with multiple vehicles, would somehow be taxed more for using more fuel.

"For instance, a family with three children and three cars would be obligated to pay more taxes,'' he said.

The government would also reduce taxes for users of ethanol if oil producers can increase the proportion of alcohol in the mix. The level of alcohol in ethanol is 10 per cent and that amount is exempt from tax.

The government believes subsidising diesel prices will benefit the public in the short and long term, but officials have been instructed to monitor the situation closely to determine if the diesel price should be adjusted or not, he said.

The government would be able to pay interest on the Bt20 billion loans that the Oil Fund is taking out to subsidise petrol prices, he said. With a growing economy, the country's revenues have increased, which should make it easier to service the loans.

Prime Minister Thaksin Shinawatra said the government would decide next week whether to force convenience stores to close early to fall in line with orders given to other retailers.

Owners of some shopping venues told the PM they are ready to co-operate and believe consumers would be able to adjust their behaviour. "One department store consumes electricity equal to one district in a remote area,'' Thaksin said.

He said petrol stations must close by midnight, but their convenience shops will be allowed to stay open. Night spots would be allowed to stick to their current hours. "We cannot bring drastic changes because workers at the night spots would be affected," he said.

Jurin Laksanawisit, opposition whip chairman, questioned why the government does not impose the same closing hours on all shopping venues, saying the different closing hours is discriminatory.

Once the Cabinet endorses the energy-saving measures next week, motorists will not see gasoline prices dip below Bt21 per litre for the rest of the year, said Metta Banterngsuk, director of the Energy Policy and Planning Office.

"The retail price will be maintained even when world oil prices head down, because we need to recoup the past gasoline price subsidies," he said.

With the end of subsidies on petrol, which have totalled some Bt7 billion so far this year, the octane-91 gasoline price should reach Bt21 per litre while octane95 should hit Bt21.74.

Metta said the Cabinet would also announce a median diesel price, once the subsidies are lifted next year, to prepare Thais for the tough times ahead. At the current Bt14.59 price, diesel is subsidised by Bt4.66 per litre.

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