Govt rejects VAT rise rumour

Govt rejects VAT rise rumour

CHIANG RAI , Nov 27 (TNA) - Finance Minister Thanong Bidaya has dismissed media reports that the government is poised to increase the current seven per cent rate of value added tax (VAT), saying there is no immediate economic need for change.

Despite a trend towards increased taxation among the world's leading economies, Dr. Thanong said that Thailand's VAT rate was appropriate to the country's economic condition. Revenue collection continued to sustain growth and to provide sufficient funding for government expenditure.

Dr. Thanong assured the public that the implementation of government policy and state projects would continue to be smooth given that the ratio between public debts and gross domestic product (GDP) stood at 50 per cent, while revenue collection was still rising steadily.

The finance minister said the reason many countries needed to raise their VAT rates was to cope with big trade deficits and rising inflation rates.

Dr.Thanong conceded that the Bank of Thailand may need to adjust its short-term interest rates in tandem with the US Federal Reserve, which was widely expected to be planning an increase its policy interest rate.

However, he expressed confidence that there would be a slight surplus in the trade balance in the second half of this year, while the current account deficit was projected to reach US$4 billion for the entire year -- less than two per cent of GDP.

--TNA 2005-11-27