Tax breaks capped at B1m for cars

Tax breaks capped at B1m for cars

Limit is B3m for first-time homeowners

Tax breaks for first-time car owners will be limited to cars with a sticker price of no more than 1 million baht, says Boonsong Teriyapirom, a deputy finance minister.

The government plans to offer excise tax deductions on new car purchases equal to discounts of up to 100,000 baht to help stimulate the auto industry and give consumers a chance to purchase their first automobile.
Mr Boonsong said the tax rebates could be structured as deductions against car loan payments.
A similar assistance programme to help first-time homebuyers will also be capped to properties worth less than 3 million baht. Under the programme, eligible buyers will qualify for a special no-interest mortgage from the Government Housing Bank, although commercial banks may be invited to participate as well.
Details on the loans or final costs have yet to be announced. Both programmes are campaign pledges made by the Pheu Thai and Chartthaipattana parties, the two largest members of the new Yingluck Shinawatra government.
Finance Ministry officials yesterday met with Finance Minister Thirachai Phuvanatnaranubala to discuss the implementation of the government's key campaign pledges.
In addition to tax breaks for first-time home and car buyers, the government also plans to offer a three-year household debt moratorium for loans of up to 500,000 baht.
One ministry official said the auto programme would be structured on a year-by-year basis to minimise the long-term impact on tax revenues.
Tax rebates should be limited to smaller standard models, with the rebate capped at 100,000 baht or the actual amount of excise tax charged on the vehicle, whichever is less.
For the first nine months of fiscal 2011 ending in June, the Excise Department collected 49 billion baht in revenues from auto taxes, a 14.8% decline from the same period last year. Passenger sedans are currently taxed at rates ranging from 30% to 50%, depending on engine size, with lower rates available for pickup trucks and hybrid-powered cars.
During the campaign, Pheu Thai promised tax breaks of up to 100,000 baht for first-time car buyers with the condition they maintain ownership of the car for at least five years.
Finance Ministry officials said the discount in practice would go beyond the excise tax deduction, as value-added taxes would also decline for new carbuyers under the programme. The 7% VAT is calculated based on ex-factory car prices plus excise taxes.
Details on the car programme are expected to be finalised shortly for approval by Mr Thirachai.
Mr Thirachai, a career central banker and former secretary-general of the SEC, is expected to discuss details about the government's new economic policies today.