BANGKOK, Aug 29 – Following the government’s controversial sharp cut in petrol and diesel prices, Prime Minister Yingluck Shinawatra on Monday defended the decision and dismissed speculation that the loss to the oil fund levy was as high as Bt300 billion, but said she would meet with the Finance Ministry to discuss its plan to hike taxes on tobacco and liquor to compensate for the loss.
The premier made her remarks amid concern that the anticipated Oil Fund loss of Bt300 billion from levy deductions after the government implemented its election promise Saturday by cutting price of diesel by three baht a litre, and that of 91 and 95 octane petrol by between seven and eight baht.
In response to the Excise Department recommendation for a possible higher ‘sin tax’ on luxury items including tobacco and liquor to compensate the losses to the Oil Fund, Ms Yingluck said more consultation is needed with the finance ministry. However, she dismissed speculation on the large amount of loss, saying her government would be able to tap budget from available sources to subsidise the fund.
Ms Yingluck said the cabinet will discuss the issue at its Tuesday meeting.
Many motorists topped up their tanks with gasoline given the narrowing price gap between gasoline and gasohol (the combination of gasoline and ethanol), for which the government was criticised for discouraging the use of renewable energy, but the premier defended her government’s decision that it is aimed at reducing cost of living of the people.
She also pledged that her government would review the current structure of petrol prices and to work out measures to encourage gasohol consumption by motorists.
Ms Yingluck asserted that commodity prices should be reduced in line with the oil price cut but it will take time as the policy has just been implemented.
As of Monday, diesel prices stand at Bt26.99 a litre, while 91 octane petrol is at Bt34.77.