BANGKOK – Thailand’s government is considering a cut to the oil excise tax as households and businesses struggle with rising fuel costs. The discussion comes after world oil prices climbed sharply because of the ongoing conflict in the Middle East.
According to a senior Finance Ministry official, a tax reduction could lower pump prices quickly if regulators approve it.
Fuel prices jumped this week, and many motorists saw increases of about 6 baht per liter. The rise followed a move by the government to scale back support from the Oil Fuel Fund. Diesel, which powers many trucks and buses, posted some of the steepest increases. As a result, long lines formed at gas stations, and concerns about living costs spread across the country.
The biggest factor is the war in the Middle East, which has pushed global crude prices higher. Since Thailand imports most of its oil, changes in world markets quickly affect local prices. At the same time, the Oil Fuel Fund had been spending huge sums each day to keep prices in check. Officials decided they could no longer hold prices down without putting too much strain on the fund.
Lavaron Sangsnit, Permanent Secretary for the Finance Ministry, addressed the issue at a recent briefing. He said that lowering the oil excise tax would bring down retail fuel prices. Right now, the tax on many fuel types is around 5 to 6 baht per liter. If the rate is cut, the savings could reach consumers right away.
Still, the government is in caretaker status, so any tax change must first get approval from the Election Commission. Even so, Mr. Lavaron said the measure could take effect as soon as it gets clearance. A special cabinet meeting held on March 25 and 26 had already agreed to study the proposal in principle.
How a Tax Cut Could Help Right Away
Excise tax makes up a large share of the price drivers pay for gasoline and diesel. So, when the tax drops, retailers can sell fuel at a lower price without hurting their margins. Earlier tax cuts during past crises showed that this method can bring relief quickly.
Experts say even a modest cut could help. For example, reducing the diesel tax by 1 baht per liter could ease transport costs in a meaningful way. That would also affect food prices, delivery charges, and other daily expenses. In short, the goal is to slow inflation before it puts more pressure on low-income households.
However, tax relief comes with a cost. A lower excise tax would reduce government revenue, and officials are being careful because public debt is already close to key limits. They also remember the heavy budget burden from repeated tax relief during the Russia-Ukraine war, which cost more than 178 billion baht. Because of that, they see this as a targeted step, not the first option.
Other Measures to Ease the Pressure
The cabinet has also approved seven urgent steps to help people manage rising costs. These measures go beyond fuel and focus on groups that are under the most pressure.
Here are the main actions:
- Welfare card support: The monthly allowance for basic goods on state welfare cards will increase by 100 baht, from 300 to 400 baht per person, for at least one month. Around 13 million low-income Thais are expected to benefit.
- Support for transport workers: Truck drivers, bus operators, and motorcycle taxi drivers will receive fuel coupons or direct cash transfers. About 360,000 truck drivers and 30,000 public transport workers could get help.
- Aid for farmers: The government will provide fertilizer subsidies through the “Green Flag” program to help hold down farm costs.
- Relief for fishermen: Authorities have approved the use of lower-cost B20 biodiesel to reduce fuel expenses at sea.
- Help for SMEs and contractors: Support will include easier access to cash, longer inspection periods for contracts, and adjustments for state projects hit by higher costs.
- Price controls and monitoring: Officials will keep watching essential goods closely to stop unfair price increases.
Taken together, these steps show a shift away from broad fuel subsidies and toward more focused support. Prime Minister Anutin Charnvirakul has urged ministries to move quickly, even while the country remains under caretaker rules.
What It Means for Households and Businesses in Thailand
Higher fuel prices affect almost every part of daily life. When transport costs rise, the price of groceries and other goods often follows. Small businesses, especially those that rely on shipping or travel, feel the squeeze first. Farmers face higher input costs, while fishermen see their profits shrink.
In places like Bangkok and Chiang Rai, commuters and delivery workers are already feeling the impact. Some families are cutting non-essential trips, while others are looking for cheaper ways to get around or more fuel-efficient vehicles.
At the same time, economists say Thailand still has fuel reserves for roughly 100 days or more, which offers some protection. Even so, a long conflict could keep oil prices elevated. Because of that risk, the government is also urging people and businesses to save energy, such as by adjusting air-conditioning use or changing office hours in some sectors.
By allowing local prices to reflect global markets more closely, while using the Oil Fuel Fund more carefully, officials hope to avoid bigger money problems later. Right now, the focus is on protecting vulnerable groups without repeating the costly, open-ended subsidies seen in the past.
Finance officials say they will review how large any excise tax cut should be and how long it should stay in place. They will also work with the Election Commission to make sure any move follows the law during the caretaker period.
If the plan gets approval, the lower tax could take effect soon and offer quick relief. Meanwhile, the government will keep a close watch on oil markets and the conflict in the Middle East.
This mix of possible tax relief and direct aid is meant to soften the hit without putting too much stress on the national budget. For now, people in Thailand can expect more efforts to keep basic costs under control as the global situation remains uncertain.
Over the next few weeks, the real test will be how much these measures help. Households, drivers, and business owners will be watching fuel prices and monthly expenses very closely.
