Bangkok-based petrol stations will be hit with a new local tax collected from their oil and gas sales at five satang a litre, starting Thursday, as City Hall steps up efforts to pull in revenue for city development.
It is the first time such a tax has been collected in the capital, although similar taxes have been levied in other provinces for a long time.
The Bangkok Metropolitan Administration (BMA) has the authority to collect the tax under the Bangkok Metropolitan Administrative Organisation Act 1985, but it wasn't until this year that the BMA came up with a city ordinance on the issue.
It was approved by the Bangkok Metropolitan Council on April 29 and announced in the Royal Gazette on June 16. The law comes into effect Thursday.
A car owner buying fuel from a Bangkok-based station will have to pay an additional five satang for each litre of petrol if operators don't shoulder the new tax.
"The operators can pass on the burden to customers, which is not illegal," said deputy Bangkok governor Jumpol Sumpaopol.
"However, consumers can decide whether to go there or somewhere else.'' Most operators in the provinces shoulder the cost themselves.
The BMA expects the tax to bring in 500 million baht a year, based on the capital's average sales of 10,000 million litres of fuel a year, from 15 major petrol station operators and 773 retailers.
Kridsada Siripiboon, director of the BMA's Finance Department, said Bangkok-based station operators are obliged to submit their tax returns at the district offices where they are located.
If the operators have several stations, they can lodge the document at the district office where their company headquarters are situated or at the Finance Department. The first monthly submission must be made before the 15th of each month, with the first to be made before Nov 15.
Anyone who fails to submit their tax returns or pay tax as required will be subject to a charge representing 1.5% of the shortfall, Mr Kridsada said.
"The BMA also has the authority to seize or sell the assets of those who do not pay the tax without having to seek court approval," the director said, adding the violators could also face a jail term of up to three months and/or a fine of up to 10,000 baht.
The BMA, he said, is also seeking an amendment of the act so it can raise the oil and gas tax from five to 10 satang per litre, and collect tobacco tax for up to 10 satang a unit.
The amendment would also pave the way for taxes on rental accommodation, Mr Kridsada said. Such taxes have long been imposed in other provinces.
Chairman of the committee, Khamron Komonsuphakit, said BMA executives proposed the fuel tax as City Hall wants to invest more in development, after previously aiming merely to balance the budget.
Of the expenditure side, 60 billion baht of the BMA's 70 billion baht income is spent on the salaries of its 100,000 staff, plus administration work, leaving only 10 billion baht for development.
The budget is relatively small, as the City has to take care of more than 10 million people spread over a 1,500 square kilometre area, city officials say.
Citing a Thammasat University study on the city budget, Mr Khamron said the BMA would struggle with its cash flow over the next five or 10 years as the city and its population grow. The BMA would have to seek more revenue.
According to an BMA source, few members of the council have been willing to levy oil and gas taxes when fuel prices are high, and politicians fear repercussions.
It is, however, suitable to make a move now when oil prices are not that high, the source said, noting the BMA has also been pressured by the Office of the Attorney-General which is asking City Hall why it has failed to levy the tax.
Sanguan Srikanapong, a petrol station operator in the Taksin area, opposed the new tax, saying he will put up a signboard saying his station will add the five satang to oil prices.
He was confident customers will understand the operator does not stand to benefit from the increased price.