Government urged to cut VAT to stimulate economy

BANGKOK: -- The government should reduce its value-added tax (VAT) to 4 per cent from the 7 per cent at present as part of measures to stimulate the country's economy, according to a top financier.

Supavut Saichue, president of Phatra Securities Plc, said since the economy had expanded at a slower pace and budget disbursement have been delayed, he wanted advised the government to come up with three more measures to jump start the economy.

The first recommendation is to cut the VAT by 3 per cent to 4 per cent for one year, which he believed could stimulate consumption and boost entrepreneurs' confidence that their products could be sold upon distribution.

The measure is considered more effective than the proposed personal and corporate tax cut, which would make the government lose around Bt80-90 billion in revenue.

He believed the measure would produce fruitful results and could prevent corruption.

The second measure is to propose to the Bank of Thailand's Monetary Policy Committee to cut the policy interest rate by 1.50 per cent from 3.75 per cent to show the government's sincerity in stimulating local investment amid the current foreign investment slowdown.

Third is to guarantee the small- and medium-size enterprise (SME) loans since the business runs a high risk and involves a lot of workers. The state guarantee would help boost confidence among SMEs that they could apply for loans.

On the local political situation, Dr. Supavud conceded it would drag on for a few years.

He said Phatra projected the country's economy would grow 3.3 per cent next year should the political disorder continue unabated.

-- TNA 2008-11-25

Does anyone believe the prices on goods will drop the same amount for end-customers?

Never happens.

Does anyone believe the prices on goods will drop the same amount for end-customers?

Never happens.

Nope!

It can stimulate the Hiso MiSo bank balances though.

Edited November 25, 200817 yr by animatic

The Canadian government cut its version of the VAT, the GST. The result? The loss of tax revenues means that the government is projecting its first deficit in many years.

Won't work. The VAT can be used to help those in dire need or to fund infrastructure.

Government urged to cut VAT to stimulate economy

BANGKOK: -- The government should reduce its value-added tax (VAT) to 4 per cent from the 7 per cent at present as part of measures to stimulate the country's economy, according to a top financier.

Supavut Saichue, president of Phatra Securities Plc, said since the economy had expanded at a slower pace and budget disbursement have been delayed, he wanted advised the government to come up with three more measures to jump start the economy.

The first recommendation is to cut the VAT by 3 per cent to 4 per cent for one year, which he believed could stimulate consumption and boost entrepreneurs' confidence that their products could be sold upon distribution.

The measure is considered more effective than the proposed personal and corporate tax cut, which would make the government lose around Bt80-90 billion in revenue.

He believed the measure would produce fruitful results and could prevent corruption.

The second measure is to propose to the Bank of Thailand's Monetary Policy Committee to cut the policy interest rate by 1.50 per cent from 3.75 per cent to show the government's sincerity in stimulating local investment amid the current foreign investment slowdown.

Third is to guarantee the small- and medium-size enterprise (SME) loans since the business runs a high risk and involves a lot of workers. The state guarantee would help boost confidence among SMEs that they could apply for loans.

On the local political situation, Dr. Supavud conceded it would drag on for a few years.

He said Phatra projected the country's economy would grow 3.3 per cent next year should the political disorder continue unabated.

-- TNA 2008-11-25

Thousands of vendors, particularly street food vendors include absolutely no VAT included anyway because their revenue is not high enough to deem being necessary to enter into the system. Reducing VAT is seen as a fair way to reduce the burden on the poor, but in Thailand many small businesses and shops are not in the system so it's benefit to the poor would be marginal. It might help the so called middle class by reducing costs in the supermarkets a little, but not those who shop in the wet markets or on street stalls. Better still would be something similar to systems in the other countries where VAT on essentials is not levied.

They could exempt food, baby products, and other essentials. That would be a start. They could also continue with essential safety equipment such as motor cycle helmets or baby car seats

Edited November 25, 200817 yr by Thai at Heart

".....projected the country's economy would grow 3.3 per cent next year...."

A meaningless calculation.

'GDP' everywhere is a Grossly Delusional Parameter, but particularly so in Thailand where so much goes on that is not counted in calculating GDP. For instance, a large proportion of the food eaten by the people doesn't count, as they grow it themselves and eat it themselves and it evades the statistics-gatherers.

He said Phatra projected the country's economy would grow 3.3 per cent next year should the political disorder continue unabated.

-- TNA 2008-11-25

Methinks he's a rather optimistic soul....

Government urged to cut VAT to stimulate economy

Soon to be ex Government by the look of things.

Try not letting a bunch of thugs shut down the international airport and hold tourists at gunpoint if you want to stimulate the economy.

Edited November 26, 200817 yr by wasabi