Thailand weighs diesel tax cut as government holds pump price at 40.69 baht
Thailand is using a refinery discount and Oil Fuel Fund compensation to contain diesel prices as global energy costs rise. A proposal to cut diesel tax by 5 baht per litre would lower the pump price to about 35 baht but reduce state revenue by an estimated 10 billion baht a month.
Refinery discount and fund support contain retail prices
Thailand is combining a refinery-level discount with compensation from the Oil Fuel Fund to limit the transmission of higher global energy costs to households and businesses. Daily News reported that the Energy Policy Administration Committee approved a discount of 4 baht per litre for B0, B7 and B20 high-speed diesel from September 16 to October 31, 2026. The Energy Ministry is also monitoring crude oil, refined-product prices and refining margins.
Energy Policy and Planning Office data for September 18 show that ordinary high-speed diesel received both the 4-baht refinery discount and Oil Fuel Fund compensation of 8.62 baht per litre. This placed the retail price in Bangkok and surrounding provinces at 40.69 baht per litre, excluding the local maintenance tax.
Support measures carry a substantial fiscal cost
Daily News calculated that, with other price components unchanged, removing the refinery discount would add about 4.28 baht per litre after value-added tax, taking the indicative price to 44.97 baht. Without either the refinery discount or fund compensation, pressure on the retail price would total about 13.50 baht per litre, implying 54.19 baht. The publication stressed that both figures are hypothetical illustrations based on the September 18 price structure, not official prices or forecasts.
The policy has prompted debate over whether a direct tax reduction would distribute support more broadly. Nation TV reported that Korn Chatikavanij, deputy leader of the Democrat Party, proposed cutting diesel tax by 5 baht per litre. He said this would bring the pump price to about 35 baht immediately. With national diesel use estimated at approximately 67 million litres a day, he put the loss of government revenue at 330 million baht per day, or 10 billion baht per month.
Tax relief competes with targeted household support
Korn argued that diesel costs reach consumers through freight, public transport, fishing and agricultural machinery even when households do not own vehicles. He contrasted a tax cut with the 50-billion-baht Thai Chuay Thai programme, saying targeted payments do not directly reduce operating costs for shops, producers or transport providers. In his calculation, the programme’s budget could finance the proposed diesel reduction for almost half a year without additional borrowing, provided spending elsewhere was adjusted to offset lower tax receipts.
As international examples, Korn cited South Korea’s 25% diesel-tax reduction and 15% petrol-tax reduction, with the measure extended through the end of November. He also referred to a German fuel-tax reduction of about 17 euro cents per litre during May and June and said both countries paired fuel measures with targeted help for vulnerable groups. These comparisons were presented as part of his policy case rather than as Thai government plans.
ASEAN comparisons depend on subsidy design
According to the Energy Policy and Planning Office dataset cited by Daily News, the rate of change in Thailand’s diesel price was 35.9%, compared with 80.0% in Malaysia and 77.4% in Indonesia under the infographic’s methodology. The government said this indicated that global-market pressure had not passed through to Thai diesel prices to the same degree.
The regional comparison requires caution. Tax structures, fuel quality, exchange rates, subsidies and eligibility rules differ across ASEAN markets. Malaysia and Indonesia offer specially priced fuel to some eligible users or programmes, while the Thai comparison concerns general market prices. The government therefore did not claim that Thai diesel was the cheapest in ASEAN; it said the September 18 price was below the general-market prices shown for Malaysia and Indonesia. The central policy choice remains whether to continue relying on refinery discounts and the Oil Fuel Fund or accept lower tax revenue to reduce costs across the diesel-dependent economy.