Auto Tax Reforms Concern Industry

Proposed changes to vehicle tax rates to be based on CO2 emissions are being met with some degree of reservation by the Thai auto industry, ever keen to hammer out the best possible deal.

The Excise Department is floating the plan restructure tax based on the carbon dioxide levels emitted. This is a good move and one that many European and "developed" nations have already adopted in various forms.

The Thai scheme would see vehicles classed into three basic groups.

Vehicles emitting between 150 and 200g/km of CO2 would be subject to a 30% tax rate. From 0 to 150g/km of CO2 would enjoy a five-point reduction, while cars exceeding the 200g/km level would face a five-point hike in the rate.

Sounds good? Well, not exactly. I'm going to have to side with the industry here. Sure, structuring tax around CO2 emissions is quite logical. For starters, even if you don't buy into the climate change theory that blames CO2 for all the world's problems, CO2 is released from cars when fuel is burned. The more fuel you burn the more CO2 is released. It stands to reason then, that if you base taxation on CO2 emissions, it's almost equivalent to basing it on fuel economy.

Additionally, in favour of the CO2 standard for emissions, it allows for consideration of electric vehicles, and hybrid vehicles, to be included into the tax scheme efficiently. Up to now, special concessionary deals were brokered, and this is just confusing and inconsistent. For example, Toyota was awarded a 10% rate for the Camry and Prius hybrid vehicles.

What's the problem Toyota?

Well. Right now, were these rates to be applied across the board, it would mean that the Toyota Prius with a CO2 rating of 99g/km would be subject to 25% tax. That doesn't seem fair, and Toyota are already moaning. The Bangkok Post quotes a top Toyota executive as saying:

"We have already invested in production lines [for hybrid cars]. And what would happen if the cars rise in price and nobody buys them?"

They make a good point. When Toyota negotiated for it's 10% rate, the company's decision to invest in Thailand hinged on the government concessions. It's this rate that allows the company to price it's hybrid models competitively. Any change to the rate could be harmful to sales.

What's the problem Nissan?

Nissan is also worried. For a start, they don't want their Leaf EV to be lumped into the 0-150g/km bracket. They argue that the Leaf is a zero-emission vehicle, and that should be taken into consideration.

And I agree with Nissan. Zero-emission vehicles should enjoy a status all of their own, and every effort should be made to encourage their use.

BMW don't like it either.

The German marque, BMW, also weighed in with some concerns over the new tax rates. According to the proposal, a 50% excise rate would be retained for vehicles with engines over 3,000cc.

The BMW argument is justified:
"If the government really wants to be fair to everyone, CO2 ratings should apply across the board without placing a hindrance on engine type, size or power."

BMW have many highly efficient Diesel engines.

Other luxury brands, like Lexus also have cars that would qualify for the sub 150g/km CO2 rating, but have engines in excess of 3 litre.

GM thinks it's a rush job

General Motors believes that the government is moving unnecessarily quickly to implement the tax changes. According to the Bangkok Post, a GM executive is in favour of the CO2 tax plan, but feels that it must be more carefully considered.

That's probably the main problem with most things that the Thai Government do. Not enough thought. Or is it too much thought?

Just copy someone

If you are going to follow the world and implement vehicle tax structured on CO2 emission levels, just go the whole hog and copy them down to the fine details.

Most countries use a more granular approach, with a EV friendly zero-emissions rate at the base. From there stepping up in 50g/km increments would seem to offer a more consistent and fairer playing field.

Right now, electric vehicles and hybrid vehicles would be lumped together with much less efficient vehicles, and the government might encourage sales away from environmentally friendly options.

Lets hope that common sense prevails.

See also : http://www.bangkokpost.com/business/economics/228930/auto-tax-reforms-flawed