A coalition of consumer advocacy groups has called for an immediate reduction in fuel excise taxes, arguing that recent price decreases are insufficient and primarily benefit oil refiners. The groups contend that high excise tax rates remain a significant factor driving up domestic fuel costs for struggling consumers.
Consumers’ Plea for Tax Relief
On Sunday, representatives from the Thailand Consumers Council’s subcommittee on public services, energy and environment, the Thailand Watch Foundation, the Thai Energy Reform network, and the Butterfly Effect group jointly petitioned Prime Minister Anutin Charnvirakul. They urged him to implement an immediate cut to fuel excise taxes. The coalition expressed concern that recent price reductions, while seemingly helpful, are temporary and misleading, with the primary beneficiaries being oil refiners.
This appeal follows a directive from Mr. Anutin on July 7, which instructed Energy Minister Akanat Promphan to lower retail fuel prices in response to declining global oil prices. Subsequently, the Ministry of Energy approved price adjustments, effective July 8. These included a reduction of 2.56 baht per liter for diesel and 2.51 baht per liter for benzene and gasohol.
Excise Taxes: A Persistent Burden
Despite these adjustments, the consumer coalition maintains that fuel excise taxes are a key impediment to lower retail fuel prices in Thailand. They highlighted the current excise tax rates, which stand at 7.50 baht per liter for benzene 95, 6.75 baht for gasohol 95, 6.92 baht for B7 diesel, and 5.953 baht for B20 diesel. These rates, the groups argue, contribute substantially to the final price consumers pay at the pump.
The coalition also criticized a government measure that reduced ex-refinery diesel prices by 1.40 baht per liter between July 9 and July 29. They asserted that this move did not effectively reduce refiners’ profits, as the Oil Fuel Fund had already compensated them for any price difference. Furthermore, the groups noted that ex-refinery prices began to increase again almost immediately after this temporary reduction, even while global crude prices continued to fall.
Structural Issues Hampering Fair Pricing
Beyond excise taxes, the statement from the coalition pointed to several long-standing structural problems within the fuel market. These include what they describe as excessive refinery margins, marketing margins that exceed government benchmarks, a lack of transparency in biodiesel pricing, and inadequate regulatory oversight of refinery pricing practices. These systemic issues, they argue, collectively contribute to inflated fuel costs for the public.
The consumer groups estimate that Thai consumers are currently overpaying by an estimated 800 million to 1 billion baht daily. This significant daily overcharge is attributed to refinery margins that remain considerably higher than what the coalition considers a reasonable profit. They propose that a reasonable margin should not exceed US$7 (approximately 233 baht) per barrel, which translates to roughly 1.40 baht per liter.
Urgent Call for Reform
In addition to advocating for lower excise taxes, the coalition implored Energy Minister Akanat Promphan to initiate broader structural reforms without delay. They issued a stern warning that any further postponement of decisive action would allow oil refiners to continue accumulating excessive profits at the expense of ordinary consumers. The groups stressed the urgency of addressing these issues to alleviate the financial burden on households and ensure fairer pricing practices in the energy sector.
Looking Ahead
The ongoing debate highlights the tension between government revenue generation through excise taxes and the immediate financial pressures faced by consumers due to high fuel prices. Consumer groups are pushing for a multi-faceted approach that includes tax reductions and fundamental reforms to the energy market’s structure. The effectiveness of these demands and the government’s response will be closely watched by the public, particularly as global energy markets remain volatile.
