TARIFFS ON HYBRID PARTS LIKELY TO STAY

       The Finance Ministry is unlikely to cut tariffs on components of hybrid cars imported from Japan as the government wants to promote the local auto-parts industry, said an informed source at the ministry.
       Toyota, the largest Japanese auto-maker, has asked the ministry to lower import tariffs on several components of the Camry Hybrid, saying the cuts would bring down the local price.
       Tax officials at the ministry said the government wants to promote local the auto-parts industry, so it would be better if Toyota and other makers produced such parts of hybrid cars, such as batteries, in Thailand.
       Batteries for hybrid cars are currently subjected to tariff rates of 20 per cent, said the source, while auto-makers want the rate cut to between 1 and 5 per cent, said the source. Car parts from Japan are not yet covered by a free-trade agreement between Thailand and Japan, so they are still subject to a high tax rate, especially those identified as finished products.
       The source said the ministry had already lowered the excise rate to 10 per cent for hybrid cars, which is considered quite low. "The lower rate of excise tax should encourage auto-makers to manufacture hybrid cars here," said the source.
       Another senior official said the Finance Ministry is facing a drop in tax revenue, so it is unlikely to cut taxes on imported auto parts, at least for the time being. The ministry projected that its tax collection is expected to miss its target by Bt200 billion for the previous fiscal year. Revenue for the new fiscal year is not expected to see much recovery from the sharp drop this year due to the slow economic recovery.
       The sources said Toyota could face a similar problem to that faced by US auto-maker Ford years age, when, anticipating a tax cut, it lowered the price on its Ford Focus before the reduction had been approved. Its engine could run on E20 fuel, which contains 20-per-cent ethanol, but the Excise Department only lowered the tax on cars using E10 fuel. Then-finance minister Thanong Bidaya refused to lower the tax on cars using E20 at that time.