Thailand's 7% VAT Value To Be Extended One More Year

[Jai Dee]

7% VAT value to be extended one more year

Finance Minister Chalongphob Susangkarn (ฉลองภพ สุสังกร์กาญจน์) approves to fix value added tax (VAT) at 7 percent for another year.

Mr. Chalongphob discloses that the contract of VAT at 7 percent will expire on September 31st. He says he has authorized a one year extension to alleviate the people's burden during the sluggish economy.

In response to private sector’s request to adjust rate of income tax, Finance Minister says his ministry will consider the matter again.

Source: Thai National News Bureau Public Relations Department - 25 April 2007

[Jai Dee]

VAT will be at 7% for another year

Mr. Sommai Phasee, the Deputy Minister of Finance, says the Cabinet meeting on May 8th has approved the Finance Ministry’s proposal to maintain the value-added tax (VAT) at seven percent for one more year. Previously, the extension would be imposed till September 2007.

Mr. Sommai says most Cabinet members have agreed with the proposal as they see that it would not be proper to raise the VAT to 10 percent during the current economic situation. Another reason for the extension is because the interim government has only a one-year term and the next government will have to make a decision on this matter.

The Deputy Minister of Finance says the decision to maintain the VAT at seven percent will not affect the government’s collection of income because the rate has been imposed for six and a half years since the economic recession.

Source: Thai National News Bureau Public Relations Department - 09 May 2007

[Tod Daniels]

Good to know they have put off raising the VAT at least until September.

To propose raising the VAT from 7 to 10 percent or OVER a 40% increase (actually 42.85%) bordered on insanity. It could however, be interpreted several ways.

There could be a deficit in funds either by lack of money coming in or too much going out.

There could be large proposed increases, in say military spending or in another area of government. The analogy; if the artists ran the country they would increase art spending rings true all too clearly.

There could be a drop in revenue from sectors which are usually large contributors; say tourism.

There could be less spending from the thais and people living/working here. Just as in any country where there is unrest and people hold onto their money more tightly.

It is far too early to predict what factor(s) precipitated the discussion to raise the VAT. At least a road less fraught with problems was taken for now. Letting an as yet to be elected government decide something as far reaching as this was a good decision all around.

[cclub75]

We could note again that the current "interim" gvt is making decision that engage the country of the the mid/long term. We are supposed to have a new gvt in january after elections...

It's a rather strange conception of democracy. Anyway.

As for the VAT, to increase or not ?

As you pointed out, why this idea is coming back, over and over ?

The state needs more money. It's obvious.

On a pure economic side, an increase of VAT makes sense. It allows to maintain at low level income and corporates taxes for instance, while increasing the public budget. The inegality of VAT (the poor pay more than the richs, comparatively) can be compensed by some mechanism, such a reduced rate for food and other first necessity goods.

However... There is a big problem. Because this is thailand, because the thai gvt is incompetent, unorganized, very heavy, not optimized... any increase of VAT... could be a simple blank check for them. In order to spend more for themselves, their croonies, and other stupid projects.

We know that we have this problem in western countries, especially in Europe : State consumme more and more of GDP. It's like a monster, always hungry.

So can you imagine the same in Thailand ?

Bigger public budget should be linked with better accountability, responsability and clarity.

Currently, we have none of this in Thailand...

Edited May 9, 2007 by cclub75

[andy1308]

7% VAT value to be extended one more year

Finance Minister Chalongphob Susangkarn (ฉลองภพ สุสังกร์กาญจน์) approves to fix value added tax (VAT) at 7 percent for another year.

Mr. Chalongphob discloses that the contract of VAT at 7 percent will expire on September 31st. He says he has authorized a one year extension to alleviate the people's burden during the sluggish economy.

In response to private sector’s request to adjust rate of income tax, Finance Minister says his ministry will consider the matter again.

Source: Thai National News Bureau Public Relations Department - 25 April 2007

So this means the 7 per cent VAT will never expire because there are only 30 days in September?

Edited May 9, 2007 by andy1308