Diesel tax cut to benefit Thai econ

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BANGKOK, 21 April 2011  – Finance Minister Korn Chatikavanij has confirmed that the diesel excise tax cut will help tame inflation and will not negatively affect the national economic expansion. 

The minister made the assessment after hearing reports from the Office of the National Economic and Social Development Board (NESDB) and the Fiscal Policy Office (FPO) regarding the diesel excise tax cut, during the weekly cabinet meeting on Tuesday.

The NESDB estimated that the reduction of the diesel excise tax by 0.005 baht a liter, lately approved by the cabinet, would slow down the headline inflation rate hike by 0.4% and would save the Gross Domestic Product from dwindling by 0.2%.

Meanwhile, the FPO indicated that the diesel excise tax cut measure would not impact on the financial stability of the kingdom as the state revenue collection in the 2011 fiscal year was anticipated to exceed the target by 133 billion baht.

Therefore, about 45-billion-baht loss in excise tax during the next four to five months due to the measure should have no negative effect on the financial status.

The minister added that the overall economy would certainly get affected instead if the diesel excise tax was not partially waved, and the government would be unable to maintain the domestic diesel price under 30 baht a liter. According to him, the real diesel price currently stands at 36 baht per liter without assistance of the government.