The first-car rebate scheme was a popular policy which helped many Thais realise their dreams of owning their first cars. Over 1.25 million people signed up for the first-car tax rebate scheme between September 2011 and December 2012. But what happened after that?
In an attempt to understand the impact of this scheme on the government’s budget,
The government also needs to pay for ongoing tax returns, which has imposed an extra budget burden.
Thai Parliamentary Budget Office (Thai PBO)
The Thai PBO predicted overall excise value in 2014 would increase by 3.5% from 2013. This forecast number is different from government’s prediction of 7.2%.
Nevertheless, we foresee no significant impact on the value-added tax and corporate income tax.
On the expenditure side, the Excise Department obtained tax from the increase in car sales of 54 billion baht. However, the government had set up 82 billion baht of tax rebates. Thus, the government may lose the difference of 28 billion baht.
In summary, the government may lose approximately 20-30 billion baht from this scheme. We note, however, the positive outcomes from the policy and the impact of the policy on Thailand’s economic growth and the automotive industry should be further assessed.