First-Car Scheme Gets The Green Light By Thai Cabinet

[webfact]

YINGLUCK GOVERNMENT

First-car scheme gets the green light

By Kingsley Wijayasinha,

Wichit Chaitrong

The Nation

Tax rebates in 2012 for buyers who must own vehicles for five years

The Cabinet has approved the Finance Ministry's proposed first-car buyer scheme, which is expected to help boost auto sales by as many as 500,000 vehicles in 2012, while as much as Bt30 million is expected to be returned to buyers in tax rebates.

The rebates will represent the return of that part of the purchase price that is made up of excise taxes.

Industry Minister Wannarat Charnnukul said yesterday that the scheme would give tax rebates of up to Bt100,000 to first-time auto buyers from September 16 to December 31, 2012.

The Excise Department will begin issuing the rebates of up to Bt100,000 for each first-car owner after he or she has owned the car for one year. The tax rebate will be a one-off payment made in a lump sum by cheque from the department.

While first-time car buyers will get the tax refund, they will be bound to hold on to their cars for five years, said Deputy Finance Minister Boonsong Teriyaphirom.

Eligible vehicles include passenger cars with an engine capacity of no more than 1,500cc (including eco-cars) and pickups (including double-cab pickups) priced at not more than Bt1 million. Previously, the scheme covered only eco-cars and pickups.

The vehicles must be locally assembled - excluding those that are assembled from used imported parts - and the minimum age for buyers is 21.

To prevent profiteering, the vehicle has to remain in the possession of the first buyer for five years.

After the first year, the Excise Department or its local office will cross-check with the Land Transport Department or its provincial office, inspect the first-car ownership status and inform about the buyer's waiver of ownership-transfer rights for five years. The details will be inspected and recorded in the Land Transport Department's computer system and in the registration booklet.

The first-car buyer booklet and the copy of the registration with its five-year waiver of ownership-transfer rights will then be sent to the Excise Department or its local office, which will pay the rebate via bank cheques starting from October 1 next year.

"The tax rebate is expected to cost [the government] about Bt150 billion, assuming that 500,000 people will buy first cars," Boonsong said. Carmakers and financial institutions will meet with Excise Department officials today to discuss details of the package, he said.

The first-car tax rebate scheme was one of the Pheu Thai Party's populist policies aimed at luring voters in the recent election.

-- The Nation 2011-09-14

[Buchholz]

"The tax rebate is expected to cost [the government] about Bt150 billion

The tax rebate is expected to cost [the taxpayers] about 150 Billion Baht.

.

[South]

Are there any double cab pick-ups available for less than 1 Million? I don't think so.

500,000 more 4 wheeled vehicles on the roads .... let the carnage begin!

[mca]

Are there any double cab pick-ups available for less than 1 Million? I don't think so.

How about all of them.

[DP25]

Glad this is going forward. The auto industry is the single most important industry in Thailand. Domestic demand should be encouraged so that Thailand becomes the permanent industrial base for the entire SEA region.

Of course it would be nice if the tax revenue lost from this were made up by enforcing taxes on the rich.

[siampolee]

After the first year, the Excise Department or its local office will cross-check with the Land Transport Department or its provincial office, inspect the first-car ownership status and inform about the buyer's waiver of ownership-transfer rights for five years. The details will be inspected and recorded in the Land Transport Department's computer system and in the registration booklet.

Another first class scam in the making. the process of verifying ownership it seems is one year later.

Is not possible that a simple addition to the registration book at the time of issue to show the non tax status of the vehicle could be entered, or even simply colour coding the registration book perhaps?

No, we will no doubt see some enterprising officials in the Excise Department department who will be able to facilitate the tax refund etc etc for a fee,

Edited September 13, 2011 by siampolee

[Bengt]

More traffic jams?

[otherstuff1957]

Korn pointed out that the cost of this program could build one more Subway or Skytrain line. Either of which would serve as many people in one week as these cars will transport in a year!

[tig28]

"The tax rebate is expected to cost [the government] about Bt150 billion

The tax rebate is expected to cost [the taxpayers] about 150 Billion Baht.

.

it is obvious that if the program operates as advertised it shall be cost neutral. The 150 Billion Bt rebate dreives from Excise which would not have been received without the sale of "extra' vehicles..

Other countries (eg: US and Australia) operate a similar scheme for first home buyers. These schemes have succeeded in their primary purpose of stimulating new home construction.

Hopefully this Government initiative shall strengthen an industry which is already the countries largest export earner.

[webfact]

Auto Industry Backs Tax Rebates for First-car Buyers

The automotive industry supports the government's tax rebates for first-time car buyers.

The program is expected to boost sales of locally manufactured vehicles to 1 million units within the next year.

Surapong Paisitpattanapong, spokesman for the Thai Federation Industries' Automotive Industry Club, expressed support for the tax rebate program for first-time car buyers, as it will help stimulate the auto market and related industries, such as steel, auto parts, rubber, glass, and petrochemicals.

He said auto parts manufacturers have been asked to increase production to keep up with swelling demand.

Sales of locally manufactured vehicles are approximately 900,000 units a year.

It's projected that the tax credit will boost sales by at least 10 percent, to 1 million units.

Pailin Chuchottaworn, chief operating officer for Upstream Petroleum and Gas Business Group at PTT Group, is of the opinion that the tax break will not result in a significant increase in oil consumption, as the engine capacity of qualified vehicles is no more than 1,500 cc.

Meanwhile, he said the program will boost car production by an additional 500,000 units, which will also benefit rubber farmers, since at least 2.5 million tires will be needed.

A preliminary report indicates that buyers of vehicles with a 1500 cc engine will get the most benefit from the program, as excise tax imposed on these cars is as high as 25 percent.

Buyers of 1500cc cars will be entitled to up to 100,000 baht in tax credit, while tax rebates for fuel-efficient cars will be 40,000 baht, and that for pick-up trucks will be from 20,000 to 60,000 baht.

-- Tan Network 2011-09-14

[Thai at Heart]

Plan for a lot of cars with dodgy ownership papers.

Does anyone expect anyone buying these cars to have to own them for 5 years or pay the excise? Better check very well the ownership docs when buying second hand cars in a few years or so.

[thaicbr]

Korn pointed out that the cost of this program could build one more Subway or Skytrain line. Either of which would serve as many people in one week as these cars will transport in a year!

Not every one lives in BKK you know.. some people actually live in other provinces...

[zakk9]

Just what this country needs... more cars.

[Sophon]

"The tax rebate is expected to cost [the government] about Bt150 billion, assuming that 500,000 people will buy first cars,"

Buyers of 1500cc cars will be entitled to up to 100,000 baht in tax credit, while tax rebates for fuel-efficient cars will be 40,000 baht, and that for pick-up trucks will be from 20,000 to 60,000 baht.

Maybe it's just my math skills that are lacking. But 500,000 cars, even at the maximum tax credit of 100,000 per car, only totals 50 billion baht. So why would this scheme cost 150 billion?

Sophon

[Murgatroyd]

Does this tax rebate scheme apply only to new cars, or are second hand cars included in the scheme?

[Buchholz]

Does this tax rebate scheme apply only to new cars, or are second hand cars included in the scheme?

As far as I've read, the scam applies only new cars and specifically only to those manufactured in Thailand.

[rubl]

Sales of locally manufactured vehicles are approximately 900,000 units a year.

It's projected that the tax credit will boost sales by at least 10 percent, to 1 million units.

Pailin Chuchottaworn, chief operating officer for Upstream Petroleum and Gas Business Group at PTT Group, is of the opinion that the tax break will not result in a significant increase in oil consumption, as the engine capacity of qualified vehicles is no more than 1,500 cc.

I've looked at the sky and saw birds flying and after this scientific approach to the problem I can tell you without doubt 'tax break will not result in a significant increase in oil consumption'

[rubl]

The Excise Department will begin issuing the rebates of up to Bt100,000 for each first-car owner after he or she has owned the car for one year. The tax rebate will be a one-off payment made in a lump sum by cheque from the department.

Buy now, get your rebate after one year. I wonder how this effects loans, repayment schedules and interest. What happens when cars are totaled or stolen? How does this effect the insurance premium?

Edited September 16, 2011 by rubl

[webfact]

GOVERNMENT POLICY

Loan terms eased in first-car scheme

By Petchanet Pratruangkrai

Wichit Chaitrong

The Nation

Rules more flexible; new wording urged to prevent unfair-trade suits

The Finance Ministry yesterday made its first-car programme more flexible for lenders that may need to repossess vehicles in case of default on instalments.

Moreover, the Trade Negotiations Department (TND) will suggest that the government change the wording on implementation of the programme to prevent disputes over unfair trade practice.

After a meeting with the Excise Department yesterday, Chalit Silpsrikul, vice president of the Hire Purchase Business Association, said lenders would be allowed to deal with defaults that come about under the scheme.

Previously, the ministry had determined that participants in the programme would have to keep their vehicles for five years. That condition would have made it difficult for lenders to do anything about a vehicle that became a non-performing asset.

However, it was agreed that lenders can seize a vehicle if the buyer has paid instalments for at least 13 months and defaults for three consecutive months. The lender has to send a warning letter to the buyer one month before seizing the car. Lenders also have to notify the Excise Department in case of default.

The department insisted that the rebate would only go to car buyers, not the lenders, in case of default.

The government will officially launch the project on October 4, with auto-makers and lenders invited to join in with special privileges to customers. Normally, the rate of non-performing car loans averages 2-3 per cent. With the first-car project, it is forecast that car loans will reach Bt400 billion to Bt500 billion from total car sales of 920,000-950,000 units, the ministry said.

Paiboon Phucharoen, honorary president of the Federation of Thai Industries, said no conclusion had been reached on whether imported cars could participate in the scheme.

The Excise Department has posted a list of car models with the possible amount of tax rebate on their purchase at www.excise.go.th. Meanwhile, some tax officials are worried that new graduates lured by the government scheme will spend beyond their means.

Srirat Rastapana, director-general of the TND, said the government had not breached its obligations under the World Trade Organisation or the Asean Free Trade Area with the first-car scheme.

However, it should change the wording in the policy, as foreign car producers could complain that they have been damaged by the scheme.

"It is normal policy for many countries to promote the use of domestic products. The scheme does not violate any obligations, but the wording should be changed to prevent future disputes," Srirat said.

Foreign car producers have threatened to sue the government for discrimination against trade partners, as the tax rebates are only offered for domestically produced cars and pickups.

Srirat said Thailand had the right to enact the policy, as it was aimed at benefiting the general public. However, as some car producers may lose out indirectly, the government should be careful how it words the programme's description.

The department will soon submit its suggestion for adjusted wording to Deputy Prime Minister Kittiratt Na-Ranong for proposal to the Cabinet next week.The Excise Department has put several car models on its website to inform consumers about which cars would be covered by the scheme, and also makes rough calculation of tax rebates.

-- The Nation 2011-09-17

[MengWan]

Good news, my son will be able to buy his first Guantanamera at a discount !

[philw]

Does this tax rebate scheme apply only to new cars, or are second hand cars included in the scheme?

As far as I've read, the scam applies only new cars and specifically only to those manufactured in Thailand.

Please explain exactly why / how is this a "scam" or are you just using the word gratuitously ???????

[PoorSucker]

Please explain exactly why / how is this a "scam" or are you just using the word gratuitously ???????

I think he refers to the election promise.

Now it turns out to be only Thai manufactured cars.

Also now it's a tax deduction.

How many new car buyers pay more than 100.000 baht in personal income tax.

From a promise of rebate to poor people it's gone to new cars for rich peoples kids.

[otherstuff1957]

Korn pointed out that the cost of this program could build one more Subway or Skytrain line. Either of which would serve as many people in one week as these cars will transport in a year!

Not every one lives in BKK you know.. some people actually live in other provinces...

This project gives a tax break to first time car buyers... as others have pointed out, this will primarily benefit wealthy people who are buying cars for their children. A majority of those people do live in Bangkok.

It's funny how so many of these populist schemes are actually benefiting the wealthy more than the poor:

1. this

2. The fuel price reduction - the biggest cut was in the most expensive grade of gas, which is usually used by people with expensive cars!

3. The 300 baht minimum wage --- only applied to BKK & vicinity, which doesn't really need another million people crowding in and looking for jobs!

4. Rice pledging scheme - we'll see how that plays out, but I suspect that the increased price of food will impact the poor (remember them.. the ones who aren't getting that 300b/day?) more than anyone else.

Finally, if all of these things go through, in 4 years Thailand will be just like the developed Western countries: up to their eyeballs in government debt!

[AleG]

Korn pointed out that the cost of this program could build one more Subway or Skytrain line. Either of which would serve as many people in one week as these cars will transport in a year!

Not every one lives in BKK you know.. some people actually live in other provinces...

This project gives a tax break to first time car buyers... as others have pointed out, this will primarily benefit wealthy people who are buying cars for their children. A majority of those people do live in Bangkok.

It's funny how so many of these populist schemes are actually benefiting the wealthy more than the poor:

1. this

2. The fuel price reduction - the biggest cut was in the most expensive grade of gas, which is usually used by people with expensive cars!

3. The 300 baht minimum wage --- only applied to BKK & vicinity, which doesn't really need another million people crowding in and looking for jobs!

4. Rice pledging scheme - we'll see how that plays out, but I suspect that the increased price of food will impact the poor (remember them.. the ones who aren't getting that 300b/day?) more than anyone else.

Finally, if all of these things go through, in 4 years Thailand will be just like the developed Western countries: up to their eyeballs in government debt!

You forgot the "best" one

5. Cutting corporate tax from 30 to 20% and increasing VAT.

So the rich will pay less and everyone else will pay more.

[kurnell]

Please explain exactly why / how is this a "scam" or are you just using the word gratuitously ???????

I think he refers to the election promise.

Now it turns out to be only Thai manufactured cars.

Also now it's a tax deduction.

How many new car buyers pay more than 100.000 baht in personal income tax.

From a promise of rebate to poor people it's gone to new cars for rich peoples kids.

Talking to the msz today and she confirms this is correct. Girls in my office earn 15-35k per month, with minimal income tax, so how can this benefit them?

[Buchholz]

Please explain exactly why / how is this a "scam" or are you just using the word gratuitously ???????

I think he refers to the election promise.

Now it turns out to be only Thai manufactured cars.

Also now it's a tax deduction.

How many new car buyers pay more than 100.000 baht in personal income tax.

From a promise of rebate to poor people it's gone to new cars for rich peoples kids.

Talking to the msz today and she confirms this is correct. Girls in my office earn 15-35k per month, with minimal income tax, so how can this benefit them?

Quite a number of the office girls should qualify with the Yingluck's government new definition of low income workers:

the price of a car purchased under the programme should not exceed Bt1 million, a feasible level for lower-income buyers.

on a car costing Bt1 million, if 80 per cent of the purchase price is financed by a loan with a term of 60 months, the buyer must pay a monthly instalment of Bt10,000, for which he or she should have a minimum monthly salary of Bt25,000.

Edited September 17, 2011 by Buchholz

[PoorSucker]

Quite a number of the office girls should qualify with the Yingluck's government new definition of low income workers:

Yes, but but their tax deduction will be about 10.000 as the will not have paid more tax than that.

Forget 100.000, that's for the rich kids.

Edited September 17, 2011 by PoorSucker

[Buchholz]

Quite a number of the office girls should qualify with the Yingluck's government new definition of low income workers:

Yes, but but their tax deduction will be about 10.000 as the will not have paid more tax than that.

Forget 100.000, that's for the rich kids.

I'm just happy for Thailand which seems well on its way for everyone to be rich in 6 months considering that 25,000 Baht monthly now being classified as low income.

.

[PoorSucker]

I'm just happy for Thailand which seems well on its way for everyone to be rich in 6 months considering that 25,000 Baht monthly now being classified as low income.

[rubl]

Quite a number of the office girls should qualify with the Yingluck's government new definition of low income workers:

Yes, but but their tax deduction will be about 10.000 as the will not have paid more tax than that.

Forget 100.000, that's for the rich kids.

I'm just happy for Thailand which seems well on its way for everyone to be rich in 6 months considering that 25,000 Baht monthly now being classified as low income.

You mean to say that the 15,000 Baht / month promised to some fresh from university people is less than low income?