‘Economy unlikely to benefit’ from shopping tax break for middle class

[webfact]

‘Economy unlikely to benefit’ from shopping tax break for middle class

By WICHIT CHAITRONG  
THE NATION

 

A woman shops for toys at a street market in Bangkok, Thailand, 26 November 2018. Thailand's consumer price index (CPI) rose to 1.62 percent, according to the Ministry of Commerce, accelerated by rising food and energy prices. EPA-EFE/DIEGO AZUBEL

 

THE SHOPPING tax allowance to be announced next week by the government will satisfy the middle class, but will do little to boost the overall economy, a prominent economist said Wednesday.
 

Anusorn Tamajai, dean of Rangsit University’s Economics Faculty, said the year-end shopping scheme is just a marketing strategy to please middle-class consumers.

 

“It is marketing. I don’t think it will do much to boost overall consumer spending,” he said.

 

The government should instead focus on boosting the income of people, most of whom are already teetering under high debts, he argued.

 

He made the comment after Finance Minister Apisak Tantivorawong announced that he would submit a shopping-tax allowance proposal to the Cabinet on December 4. The break will cover three groups of products, with a Bt15,000 cap on the maximum eligible purchase amount.

 

Apisak said the allowance would cover tyres made in Thailand, as the government wants to help rubber farmers who have suffered from low prices for latex and rubber sheets. To qualify, tyre manufacturers must use local rubber as the raw material, he said.

 

The second group is community-based products, such as those sold under the One Tambon One Product (OTOP) brand, reflecting the government’s desire to help small local producers by encouraging shoppers to buy the products as gifts during the New Year season.

 

The third group covers books, e-books and related products with the aim of promoting reading.

 

Shoppers must make purchases between December 15 and January 15 to qualify.

 

Those who buy the products during this period will be eligible for a tax allowance when they file their personal income tax returns next year, but those who make purchases in the first two weeks of January will be eligible to claim the tax allowance in 2020.

 

More details will be available after the Finance Ministry submits its proposal on tax allowances for shopping to the Cabinet on December 4, he said.

 

This year’s shopping tax allowance is different from the allowances offered in previous years, as the government is satisfied with the increase in consumer spending and so has limited the range of products covered. Anusorn said buying tyres was unlikely to raise the price of rubber products and so will have a minimal impact.

 

People do not change car tyres often, he pointed out. However, he agreed that offering tax incentives to boost the sale of OTOP products will indeed benefit small local producers. He also agreed with a tax allowance to promote reading, as publishing houses that have suffered from disruptive technology may benefit from the scheme.

 

In a related development, October’s economic indicators suggested an economic rebound from a slower growth in September, the Finance Ministry said.

 

Pornchai Theeravej, finance and economics adviser to the Fiscal Policy Office, said yesterday the economy in October was driven mainly by consumption and private investment. The value-added tax (VAT) collection rose 7.1 per cent year on year, the highest growth rate over the past three months. The VAT revenue is an indicator of the rise or fall in household spending.

 

Car sales rose 14.1 per cent, as consumers had increased confidence of their future incomes. Registration of new motorcycles rose slightly at 1.9 per cent, suggesting farmers and low-income groups were cautious of spending. Farmers had more income due to an increase in production, he said. Sales of commercial vehicles rose 36 per cent, the highest growth rate in 70 months, indicating rising private investment.

 

Sales of cement rose 13.8 per cent, the highest in 65 months, suggesting robust activity in the construction sector. Exports had turned to grow at 8.7 per cent in dollar terms after contracting 5.2 per cent in September.

 

The number of tourists dropped by 0.5 per cent to 2.71 million, due mainly to a sharp drop in Chinese tourists, though revenue from tourist spending did show a 0.7 per cent increase in October to Bt141 billion.

 

Source: http://www.nationmultimedia.com/detail/Economy/30359477

 

-- © Copyright The Nation 2018-11-29

[fruitman]

On the picture i see loads of plastics which will be in the bin and burned within a year...welll done!

[madmitch]

Weird concept! 

 

How many Thais fill in a tax return?

[simoh1490]

4 minutes ago, madmitch said:

Weird concept! 

 

How many Thais fill in a tax return?

 The minimum income threshold for being required to file a tax return shall be revised as follows:

i. For a taxpayer who has only employment income:

• if single, and income exceeds 100,000 baht (previously, 50,000 baht); and
• if having a spouse, and the sum of the taxpayer’s and spouse’s income exceeds 200,000 baht (previously, 100,000 baht).

ii. For a taxpayer who has employment income and other income, or who has only other income that is not employment income:

• if single, and income exceeds 60,000 baht (previously, 30,000 baht); and
• if having a spouse, and the sum of the taxpayer’s and spouse’s income exceeds 120,000 baht (previously, 60,000 baht).

iii. An undistributed estate must file a tax return if its income exceeds 60,000 baht (previously, 30,000 baht).

iv. A non-juristic partnership or a non-juristic body of persons must file a tax return if its income exceeds 60,000 baht (previously, 30,000 baht).

6. This proposal would apply to the tax year 2017 onwards.

Thus, based on the proposal above, if you are an employee and your monthly salary is 25,833 baht or less, assuming that you do not receive other taxable income during the year (such as a bonus or other fringe benefits), you will not have to pay personal income tax.

 

https://www.mazars.co.th/Home/Doing-Business-in-Thailand/Tax/New-Thai-personal-income-tax-structure

[dwcrist]

So only a 0.5% drop in tourists because of a large drop in Chinese tourists, but tourist spending still showed a 0.7% increase despite the Chinese leaving. This would suggest that they represent a small percentage of tourists and even less of the tourist revenue. Maybe Thailand shouldn't be groveling at their feet to get them back.

[Srikcir]

25 minutes ago, dwcrist said:

So only a 0.5% drop in tourists because of a large drop in Chinese tourists, but tourist spending still showed a 0.7% increase despite the Chinese leaving.

It also suggests that there is an inverse economic relationship between the number of Chinese tourists and revenues. At the extreme, get rid of 100% Chinese tourists and increase revenues by 100%!

That's of course ridiculous which must mean the tourist data is faulty.

[userabcd]

The world over, those thresholds are so low.

[dwcrist]

7 minutes ago, Srikcir said:

It also suggests that there is an inverse economic relationship between the number of Chinese tourists and revenues. At the extreme, get rid of 100% Chinese tourists and increase revenues by 100%!

That's of course ridiculous which must mean the tourist data is faulty. 

The data could very well be faulty. But a small inverse change in revenue percentage doesn't necessarily denote data inaccuracy. It could represent a higher rate of spending by the current set of (fewer) tourists.