Excise Tax for New Car 2016


It is realized that to purchase a car, the wise cogitation is needed because of high selling price and long useful life. The price of vehicle plays a major role to consumer in making decision. Excise tax rate is a factor that causes the different cost of vehicle production. It is collected from luxury product and product which effects to environment or moral. Thus, it is a tool for fairness in society. As car is categorized in the group of luxury product and causes pollution to environment, it is collected for the excise tax.

Nowadays, the excise tax is calculated by the capacity of engine cylinder which is based on the concept of the more capacity of cylinder the more emission; therefore, it must pay higher tax. However, at present and even in the future, there are technology revolution and development in more efficient engine, chassis weight reduction from using lighter material and environmentally-friendly oriented. As a result, Thailand has revised the concept of collecting tax by based on the emission of CO2. Thus, the existing excise tax will be canceled at the end of 2015 and the new one will be applied with new car in 2016.

This new excise tax delivers fairness in collecting tax and encourages consumer for environment oriented value. It also conforms to ECO sticker system that indicates fuel consumption and emission rates as specified by Ministry of Industry.

Objectives of New Structure of Excise Tax Based on Emission Rate of Carbon Dioxide (CO2)
•Promote the fuel optimization
To optimize the using of fuel, well planning and efficient controlling are needed in order to generate ultimate benefits as well as reduce energy loss in all processes.
•Promote the using of environmentally-friendly engine

The new excise tax, which the calculation is based on CO2 emission rate, is to promote the using of environmentally-friendly engine. This is a decent policy to reduce the emission of greenhouse gas.   
•Promote alternative fuel
The new excise tax is an effective policy from the government to promote the use of
low emission vehicle and economy car such as Hybrid, Electric Vehicle (EV), etc. or seeking for alternative fuels.
•Support high safety vehicle
It increases the safety standard in safety system as Active Safety in Thai automotive
industry sector. Regularly, the price of the vehicle with this safety is high.
•Promote the enhancement of efficient engine to CO2 emission
This urges automotive manufacturer to design and develop vehicle with lower emission
rate. Manufacturer has to improve and develop the lowest emission engine; including; reducing size of engine, increasing capacity of combustion and selecting the alternative fuel with low emission that still maintains power and acceleration.   

The Principle of New Excise Tax Rate
The new excise tax rate corresponds to the current direction of world industry which concerns in fuel economy, reducing pollution and increasing standard safety. This will provide benefit to consumer and increase competitiveness in the world market. This new tax rate considers 3 major subjects: 1. Fuel economy condition 2. Emission Rate of CO2 and 3. Safety standard. Any manufacture who meets these concerned subjects will receive additional privileges. This attracts manufacturers to realize the significance of fuel economy and environmentally-friendly oriented value.

The core concept of Polluters Pay is “the more pollution the more tax payment” This new tax focuses on fuel consumption and emission rates in order to conforms with the direction of automotive technology development in fuel economy and environmentally-friendly value. It specifies that vehicle with emission rate at 150-200 g/km will pay the normal rate. On the other hand, if the vehicle with emission rate is less than 150 g/km, the 5% discounted tax rate will be given. However, if the emission rate is over 200 g/km, additional 5% of tax rate will be collected. This is the motivation to reduce pollution and promote manufacturer to apply technology of production with more efficiency and environmentally-friendly fuel. Moreover, this also attracts more consumers to buy environmentally-friendly and fuel economy vehicles.

The new calculation of excise tax rate is based on emission rate which differs from those previous tax collections. It still categorizes the same vehicle type and the highest tax collection rate is 50%. However, it also adds the emission rate for tax rate specification. By comparison the previous and new tax rates, it reveals that the tax collection from previous ones among diesel engines with high emission and low emission vehicles; for example, hybrid, eco car, vehicle with using gasohol E20 and E85, has been used the same rate. Thus, this new excise tax will correct this unfairness. Moreover, there are adjustments of this new tax rate which is considered by the rate of emission and type of technology applied to vehicle. If that vehicle meets those specific criterions, the tax rate may be reduced up to 20%. On the other hand, the increasing tax rate is also reasonable for vehicle with higher emission. Furthermore, vehicle needs to be installed safety equipment: 1. Active Safety as accident prevention; for instance, ABS and ESC and 2. Passive Safety as injury prevention such as Airbag, Safety belt and Glass.

The excise tax is a tool to acknowledge consumers and urge them to realize the effect of CO2 emission or Green House Gas which is a key that causes Global Warming. Thus, the Excise Department collaborates with Ministry of Industry to launch the Eco Sticker for consumer to consider and use efficient and environmentally-friendly vehicle. All vehicles must have Eco Sticker to indicate emission rate and other 4 data sections which are:
1. Data of manufacture or importer: Name, Address and Website
2. Data of vehicle: Model, Type, Chassis, Transmission, Tire size, Vehicle weight, Fuel type and Production plant
3. List of equipment pre-installed from the plant: Major equipment of fuel economy, safety and others
4. Testing based on the referenced standard: Fuel consumption rate (liter per 100 kilometer) in 3 types of driving environment: Combined, Urban and Extra-Urban. Additionally, it also shows referenced fuel consumption in combined environment which is tested with specific fuel. 

The new excise tax calculation is applied and categorized into 7 vehicle types
1. Passenger car and Bus with < 10 occupied persons and capacity ≤ 3,000 cc. If
CO2 emission rate is ≤ 150 g/km, tax rate is 30%.
CO2 emission rate is 150-200 g/km, tax rate is 35%
CO2 emission rate is > 200 g/km, tax rate is 40%

2. Passenger car using E85 and CNG with capacity ≤ 3,000 cc. If
CO2 emission rate is ≤ 150 g/km, tax rate is 25%.
CO2 emission rate is 150-200 g/km, tax rate is 30%
CO2 emission rate is > 200 g/km, tax rate is 35%

3. Hybrid with capacity ≤ 3,000 cc. If
CO2 emission rate is ≤ 100 g/km, tax rate is 10%.
CO2 emission rate is 100-150 g/km, tax rate is 20%
CO2 emission rate is 150-200 g/km, tax rate is 25%
CO2 emission rate is > 200 g/km, tax rate is 30%

4. Pick-up truck (Single Cab) with capacity ≤ 3,250 cc. If
CO2 emission rate is ≤ 200 g/km, tax rate is 3%.
CO2 emission rate is > 200 g/km, tax rate is 5%

5. Pick-up truck (Space Cab) with capacity ≤ 3,250 cc. If   
CO2 emission rate is ≤ 200 g/km, tax rate is 5%.
CO2 emission rate is > 200 g/km, tax rate is 7%

6. Pick-up truck (Double Cab) with capacity ≤ 3,250 cc. If   
CO2 emission rate is ≤ 200 g/km, tax rate is 12%.
CO2 emission rate is > 200 g/km, tax rate is 15%

7. PPV with capacity ≤ 3,250 cc. If   
CO2 emission rate is ≤ 200 g/km, tax rate is 25%.
CO2 emission rate is > 200 g/km, tax rate is 30%

Comparison the Existing and New 2016 Excise Tax Rates of Each Type of Vehicle

Source: Ministry of Finance (MOF)

Expected Results
• Government
The government determines to promote Thai automotive industry and conform the
moving forward of technology development in the world automotive industry that emphasizes on environmentally-friendly and fuel economy. The government also encourages consumer to drive small-medium car as well as production and driving new innovation vehicle such as Electric Vehicle or using alternative fuel. Additionally, the tax collection is more effective because of lessen complication.

• Manufacture
This supports the production of vehicle which uses fuel, worthily, being
environmentally-friendly and has more safety standard. This also drives those automotive manufacturers to bring their new technologies of engine with high efficiency to Thailand in order to enhance competitiveness and drive Thailand as the major automotive manufacturing base in the world as same as 1 ton pick-up truck. It generates the value added and increases Thai automotive industry standard, as well.

• Consumer
This excise tax is the tool that brings innovation and new technology to consumer for
having the better living such as fuel economy. Consumer is able to buy a vehicle with efficiency in fuel economy and reducing Greenhouse gas by considering from Eco Sticker. The lesser of CO2 emission, the more privileges of tax are offered as well as the safety that consumer will receive as of safety standard.

• Society
It delivers fairness for collecting tax and encourages consumer to concern more in environment. It reduces amount of Greenhouse gas that caused global warming, as well.


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