Thailand Finance Ministry readies pollution tax

Graduated rate based on factory severity

The Finance Ministry is preparing to tax factories based on how badly they pollute the environment, says Somchai Sujjapongse, director-general of the Fiscal Policy Office.

Prior to this, the ministry drafted a law to tax polluters based on the “polluters pay” principle.

The first draft was scrapped after the Council of State disagreed with the method of taxing polluters primarily by volume.

The bill-scrutinising body felt a different rate should apply to each type of pollution.

The ministry is therefore drafting a new bill that will group different types of pollution into categories such as water and air.

Currently, Thailand has 170,000 factories.

Mr Somchai said under the new bill the rate for water will be tied to biochemical oxygen demand values of discharged water and will be progressive.

In contrast, the scrapped bill will tax 10,000 baht for each tonne of water discharged yearly. For air pollution, the rate is 2,500 baht a tonne.

Tourists will also be taxed at 15% of their fares or 1,000 baht per person, while the packaging tax is set at 15% of packaging costs or 10,000 baht per unit.

“The first bill has a lot of details and different tax rates. But the Council of State disagreed with the method of calculation, saying it was complicated and disputable if we apply the same calculation method to different types of pollution,” said Mr Somchai.

“In any case, the law is an effective tool to force people to pay attention to the environment.”