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The Thai government hopes a move to spark a shopping spree by offering tax breaks and cash handouts at the end of the year will improve economic stimulus in the fourth quarter.
The cabinet approved a tax break for shopping spending or spending on services during the festive season between December 14-31.
Bank of Thailand Governor Veerathai Santiprabhob said the tax breaks would be a smart short-term stimulus measure before major government projects were launched next year.
The tax break means that taxpayers can deduct up to 15,000 baht from their taxable incomes so that they will pay less income taxes.
As such, they will have saved from 750 baht up to 5,250 baht in taxes for the 15,000 baht shopping spending, depending on their taxable incomes.
Veerathai said temporary factors affecting economic activities were lower agricultural prices, mainly rice, the crackdown on zero-dollar tours resulting in the decline in Chinese tourists and the mourning period for His Majesty the King.
The government needs a short- term stimulus measure to fuel |economic growth in the fourth quarter, he said.
The tax breaks should be a short- term tool because boosting spending will impact on future domestic demand, he said.
There is also a remedial measure to spur economic growth, with the government handing out Bt12.5 billion to the poor, or between Bt1,500 and Bt3,000 each person.
Mr Kobsak Phutrakul, assistant minister to the Prime Minister’s Office, said the government expected that the tax break would help boost spending during the festive season before year end.
No booze please
Shopping spending for the following items will not be eligible to tax break namely liquor, beer, tobacco, fuel oil and gas for vehicles and vessels.
Mr Kobsak said the measure would cost the government about 3.2 billion baht in revenue loss, but, on the other hand, would generate about 20 billion baht in circulation in the economic system or 0.2 percent of the GDP.
On top of that, the assistant minister to the Prime Minister’s Office claimed that the tax break would boost job creation and production until early next year.
Moreover, he said that the measure would encourage business operators to enter tax system which, in the long run, will benefit the government’s revenue collection in the future
Giving cash handouts to low income-earners
Three state-owned banks have started giving one-time cash handouts ranging from 1,500-3,000 baht to low income-earners in agriculture and non-farming sectors.
Government spokesman Lt-Gen Sansern Kaewkamnerd said over the weekend that he expected the payments to the qualified recipients to be completed before the year-end as New Year’s gift from the government.
He disclosed that there are altogether 6,981,000 qualified low income-earners who are eligible to receive the cash handouts to be wired directly into their bank accounts by the three banks, namely Krung Thai, Government Savings and Bank of Agriculture and Agricultural Cooperatives.
Those who earn less than 30,000 baht a year will receive 3,000 baht while those earn more than 30,000 baht but not exceeding 100,000 baht will get 1,500 baht. These one-time cash handouts are applicable for those in agricultural and non-agricultural sectors.
Source: Tax break on goods needed to fuel economy, says BOT chief