PM wants review of all car-tax matters

The cabinet yesterday deferred consideration of duty exemptions on parts imported for hybrid cars, pending a broader review of incentives for other types of fuel-efficient and environmentally friendly vehicles.

Prime Minister Abhisit Vejjajiva agreed to an expanded study by the Finance, Industry and Energy ministries, which were given a month to come up with new proposals to present to the cabinet.

The Finance Ministry earlier approved a request by Toyota Motor Thailand to waive import duties on parts for petrol-electric car production as some of them, mostly battery and motor components with high technology, could not be manufactured in Thailand.

The Japanese automaker, the only local producer of hybrids at the moment, sought the waiver for three years, by which time it expected the parts could be made in Thailand.

Toyota said it had already factored the tax waiver into its suggested retail price structure for the popular Camry hybrid.

Toyota currently makes 1,000 units a month of the 2.4-litre Camry hybrid, with 700 slated for the local market and the remainder for Asia and Oceania.

However, Energy Minister Wannarat Charnnukul also asked the Finance Ministry yesterday to consider tax incentives for other types of vehicles that were fuel-efficient and environmentally friendly, such as eco-cars and those compatible with E85 gasohol. He said the overall incentive package should be fair to all players and not overlap with existing tax measures for these vehicles.

Mr Wannarat is a staunch supporter of flexible-fuel vehicles (FFVs) that can consume gasoline as well as gasohol up to E85, which contains 85% ethanol and 15% petrol.

He wants tax privileges for parts imported for E85 vehicles, especially parts for local engine production. The Finance Ministry has not approved the tax privileges.

Locally, only Mitsubishi Motor Thailand builds E85 cars on a large scale, but Volvo has a small number of the vehicles in the niche market.

The Finance and Energy ministries have been at odds over excise tax reductions for E85 vehicles. The Finance Ministry sees such a move as premature as the prospect for adoption of E85 fuel on a large scale is not certain.

The Energy Ministry wanted 3% excise tax reduction to encourage the use of ethanol and help bring down the prices of E85 vehicles.

In the absence of Finance Ministry agreement, the Energy Ministry decided to grant a 3% discount of excise tax on E85 vehicles through a subsidy from the energy conservation promotion fund.

In the case of eco-cars, an industry executive said he did not know why Mr Wannarat wanted to include consideration of tax incentives for eco-cars in the new review since the Board of Investment has already outlined incentives and additionally has the authority to grant tax privileges for the parts imports.