Thailand OKs Tax Break for First-Time Car Buyers

The Thai cabinet approves an excise-tax deduction for first-time car buyers who purchase locally built vehicles between Sept. 16, 2011, and Dec. 31, 2012.

Deputy government spokesman Chalitrat Chantharubeksa says the vehicles must have an engine capacity of not more than 92 cu.-in. (1.5L) or be double-cab pickup trucks with unlimited engine capacity but with a price not exceeding TB1 million ($33,133).

First-time buyers of locally built Nissan March qualify for tax break.

The refund is capped at TB100,000 ($3,311). Buyers are required to retain ownership of the new vehicle for at least five years.

Chalitrat tells the Bangkok Post purchaserss must be age 21 or older and can seek a refund of the tax deduction up to one year after the purchase.

The Thai Finance Ministry is seeking cabinet approval for TB100 million ($3.3 million) from the 2012 budget and TB30 billion ($993.3 million) in the 2013 budget to pay for the refunds.

Pairin Chuchotethavorn, chairman and president of oil and gas-supplier PTT, says the tax refund could boost annual Thai vehicle sales to 500,000 units.

But former Finance Minister Korn Chatikavanij is quoted as saying he’s worried a policy encouraging high-income people to buy a car will worsen already-critical traffic congestion in Bangkok.

The Thai Automotive Industry Assn. is another critic, saying not all auto makers will enjoy the same benefits, and the government might end up having to raise taxes in the long run to offset the revenue shortfall.

Association President Piengjai Keawsuwan says the tax refunds for first-car purchases will result in an uneven playing field for all auto makers at a time when the car market is performing well without government intervention.

“Not all manufacturers will benefit,” Piengjai, also vice-president of Siam Nissan Automobile, tells the Bangkok Post.

Cars such as Toyota’s Vitos and Yaris, Honda’s Jazz and City, Ford’s Fiesta, and the Mazda2 will be the biggest beneficiaries. Some auto makers, including Mitsubishi, have no qualifying models.

Federation of Thai Industries Automotive Industry Club spokesman Surapong Paisitpattanapong says the government put the scheme in place without consulting auto makers.

He tells the newspaper excise department officials will meet with auto company executives to discuss how the plan will be carried out. “We have to look at the details to see if additional measures will be launched to cope with possible impacts,” he says.

Thailand Automotive Institute Director Vallop Tiasiri says the first-car-buyer program could seriously affect eco-cars because the price gap between the small cars and some subcompact models will be narrowed.

“This is something they (government officials) do to gain votes without looking at how the industry will be affected,” Vallop is quoted as saying.