In July 2012, two members of the Federation of Thai Industries (FTI) – the Thai Automobile Industry Association (TAIA) and the Automotive Industry Club (AIC) – co-organized a symposium on a new concept of vehicle taxation based on carbon dioxide (CO2) emission. The symposium invited experts from Thailand, Japan, Europe and America to exchange their views. The main highlight of the event was a panel discussion, “Tax Policy and the Sustainable Development of the Thai Automotive Industry,” which involved government and industry reptresentatives from the Ministry of Industry, Ministry of Energy, FTI, as well as the Thai media. Representatives debated on issues surrounding the new taxation policy proposed by the Thai government, and suggested solutions to promote an effective CO2 emission-based tax incentive. In this

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issue, we present a background on the features related to the CO2 reduction system, as well as some highlights of the panel discussion and issues raised by the experts and participants during the symposium.


Today, climate change and global warming are widely recognized as serious environmental problems. The cause is due to the rising concentrations of greenhouse gases in the atmosphere. One of these gases is CO2, which makes up the largest share of greenhouse gases produced by human activities. According to the International Energy Agency (2010), the total global CO2 emissions in 2008 was 29.4 billion tons. Among that, the power generation sector contributed the largest share of 45.9%, followed by the transportation sector at 22.5%.

In order to manage the problem, the Kyoto Protocol – an international agreement linked to the United Nations Framework Convention on Climate Change (UNFCCC) – was adopted in 1997 by most industrialized countries, and was enforced by February 2005. However, there is a growing international opinion that both industrialized countries as well as developing nations should take stronger measures to reduce CO2 emissions in their countries.

Recently, the Thai government highlighted that the time has come for a review of the current excise tax system in the transportation sector. With the introduction of new technology in recent years, vehicles with large engines and horsepower are now capable of emitting lower CO2 emissions. Therefore, a more attractive tax rebate was needed to encourage long-term reduction in CO2 emissions from all types of vehicles.

As a result, the new CO2 emission-based excise tax system was drafted and is slated to be carried out in the near future. The qualifying reference level of CO2 tax rebate is 150 g/km for cars and 200 g/km for pick-up trucks. More specifically, cars emitting less than the reference level will be taxed 5% less than normal rates. However, similar to pick-up trucks, cars that emit more than 200 g/km will be taxed at a maximum of 5% more.

Symposium Highlights

During the symposium, however, there were concerns that the Thai authority may be acting too hastily should they decide to implement the new tax policy immediately after its announcement. According to Mr Suparat Sirisuwanangkura, the Chairman of AIC, “Normally, automakers require several years to introduce new models.” Mr Suparat also pointed out that, “In the case of Europe and Japan, 5 to 10 years were required to discuss and develop the solution of CO2 reduction in vehicles. Hence, the new proposed tax system may be incomprehensive due to the lack of trade consultation with the industry and motorists. For example, the new policy did not differentiate vehicles running on E85 (gasoline blended with 85% ethanol) or E20 (gasoline blended with 20% ethanol), as they receive the same tax rebates as vehicles on conventional fuels. On top of that, cars that are 10 years and older are not included in the new scheme.”

According to an expert from JAMA, Mr Hirotsugu Maruyama, “The Japanese government is committed to reducing its greenhouse gas emissions under the Kyoto Protocol Target Achievement Plan in all major sectors. Since then, in the transportation sector especially, Japan has been making vigorous efforts through an Integrated Approach. The automakers have developed fuel efficiency vehicles, which are being promoted to the motorists. In order to encourage the wider use of these eco-friendly vehicles (which are fuel-efficient and low-emission), the Japanese government has adopted auto-based tax incentives.

Besides building infrastructures such as new roads to improve traffic flow, securing a stable supply of alternative energy in the market is also being provided by government and industry sectors. Furthermore, the Japanese government has collaborated with auto-related organizations to raise public awareness on eco-friendly driving practices. These practices, such as maintaining a steady speed while driving and reducing vehicle load on the roads, are widely promoted to drivers.”

Based on these case studies, Mr Suparat has proposed further discussions with stakeholders to revise the new scheme, and aims to implement this scheme in at least 5 years.


The symposium has successfully created a consensus within the Thai government on the importance of open communication with stakeholders, and in providing adequate time to effectively implement a CO2 emission- based tax scheme. We envision the Thai authority will build a more comprehensive CO2-based tax structure for Thailand with industries and motorists. JAMA has reaffirmed its position on the Integrated Approach and is eager to continue serving Thailand as a resource to reduce CO2 emissions, in order to achieve a sustainable development for the Thai automotive industry.



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