PM Yingluck's Advisor Virabongsa Calls For Hike In VAT

[webfact]

Virabongsa calls for hike in VAT

The Nation

Says other taxes could be eased

BANGKOK: -- Virabongsa Ramangkura, chairman of Prime Minister Yingluck Shinawatra's advisory team, yesterday proposed raising by 1 percentage point the value added tax (VAT), which currently adds 7 per cent to the cost of consumer products.

"This would result in additional revenue of Bt60 billion for the country, which would enable us to ease other types of tax collection," he said.

Speaking at a seminar on globalisation organised by the Senate committee on the economy, Virabongsa said the current tax structure created a negative investment environment. Taxation should be used not only for income generation, but also to reduce the gaps between different groups' standard of living, he said.

Taxation tends to have the heaviest impact on middle-income earners, Virabongsa said, because existing tax measures contain many exemptions, making it hard for the government to collect more from the rich, whose income derives mostly from interest, dividends and capital gains. Without these exemptions, however, the country's competitiveness would suffer - including a drop in stock-market sentiment - resulting in capital outflows to such places as Singapore, he said.

"Therefore, the tax system should be based on consumption."

Virabongsa also outlined his vision for the country's future, two keys to which would be increased efficiency of rail and air transport.

He said the global poles of economic growth had shifted from the West to Asia, in particular China and India. In addition, Myanmar is opening up to new foreign investment. Thailand has many advantages over other countries, with its 1,500-kilometre border with Myanmar, he said.

However, Thailand still lags behind some of its neighbours, so it is important to speed up development of infrastructure and the information-technology system, Virabongsa said.

Of particular importance in terms of infrastructure is Suvarnabhumi Airport, which is now stretched beyond capacity, he said. The airport handles 48 million people a year, compared with an official capacity of 36 million. He urged the government not only to come up with an expansion plan for Suvarnabhumi's second phase, worth Bt60 billion, but also to develop Don Mueang Airport for greater use.

"Now, Thai AirAsia has confirmed its participation in the development plan [for Don Mueang]. The connectivity problem between Suvarnabhumi and Don Mueang will be resolved with a shuttle-bus service," he said. But he added that in the long term, the government would need to build an extension of the Airport Rail Link connecting Bangkok's Makkasan station to Don Mueang. However, this could take up to three years, he said.

He said the government would develop industrial estates for heavy industries in the eastern provinces, to ensure a sufficient water supply. Light industries would be encouraged to locate in other areas in the North and Northeast.

New mindset needed

For IT development, Virabongsa said the government should change its mindset, from focusing on how to generate maximum income for the state to how the state can help bring down prices. For example, if there is bidding, the government should not focus solely on finding a winner who offers the highest price, as this would be passed on to consumers.

"When tackling big tasks, have the confidence and assurance to do it. One thing I wish to reform is railway transport, which is obsolete," Virabongsa said.

However, he said the government should not remove the existing railway system altogether, but leave it in place for use by lower-income earners. Meanwhile, it should build a new railway system that is able to carry shipments at speeds of 100-120km/h, in addition to mass-transit lines with speeds of 250-300km/h.

"This proposal could be completed in 10 years at a cost of Bt2.2 trillion," he said.

He also suggested that labour-intensive industry should move to neighbouring countries or they would not be able to survive, as technology would replace manpower in the Kingdom.

-- The Nation 2012-04-28

[rogerman]

He also suggested that labour-intensive industry should move to neighbouring countries or they would not be able to survive, as technology would replace manpower in the Kingdom.

Ok thats fine...... Just what do they propose to do with the population after technology takes over?

[moe666]

Thats the same story line they pass off in the states more technology less labor intensive jobs. Thats 8 percent unemployement.

[LuckyLew]

"Taxation tends to have the heaviest impact on middle-income earners, Virabongsa said, because existing tax measures contain many exemptions, making it hard for the government to collect more from the rich,"

Here's a bright idea .... remove the loopholes make the rich pay their fair share of taxes.

Good forbid they give the poor a middle class a chance and a break.

Good forbid the poor and middle class are able to afford to eat more than mama noodles

towards the end of their pay periods.

[hyperdimension]

So the poor people would have to pay more for things including basic survival essentials. I wonder what they think of that, particularly the people who voted for Pheu Thai. Why didn't they propose a VAT increase before the election?

[volk666]

Virabongsa has never accomplished anything in his life, certainly not on the scale he is talking about here. Dude is just talking himself up for his big appointment as the chairman of Bank of Thailand where he will finally be able to lay his hands on a huge pile of money generated by his enemies, people who always did opposite to what he proposed.

Now it's time for the payback, he can't help himself drooling over how he would spend their hard earned money.

All his ideas are about as realistic as giving out a million tablets to the students in two weeks time, he is just a village bastard who wants to have a go at Excalibur.

[keestha]

SME's are already hit hard by the minimum wage increase, and this would come on top of it. They would probably be promised low interest loans to soften the blow.

[Greer]

An increase, even small, would also be likely to hit our tourist industry as well... although our VAT is lower than many places, when these things happen its usually the CHANGE that people see, rather than the actual amount.

A small change in VAT may help the government coffers, but surely closing tax loopholes would be a better option - of course that would tend to hit the "elite" (such as very very wealthy families), and they wont like that...

[Ricardo]

But "all Thais will be rich after six months", the six months having expired three months ago, so surely any remaining pockets of poor-Thais are an illusion or political-propaganda ?

Back in the real world, how about reversing the speedily-implemented corporate-tax cut (from 30% to 23%), and funding a cut in VAT instead, or bringing back free hospital-treatment by cancelling the 30B-charge?

One might also point out that, far from taking a decade to build a high-speed railway-system, the Chinese high-speed freight-line was supposed to be up-and-running by 2015, and that (so far as I've heard) nobody has proposed closing the existing rail-network, indeed wasn't there an locally-popular election-promise of an extension from Lampang to Chiang Rai ?

And isn't the planned-capacity of Swampy supposed to be 45 million pax/year, not 36 million ? And the second-phase expansion is already underway, according to announcements earlier this year, so why would the government still need to "come up with an expansion plan", for something which is already happening ?

[OzMick]

VAT is known as a regressive tax because it affects the poor more as a percentage of their income. But increasing progressive taxes may lead to the rich investing elsewhere, so stick it to the poor who have nowhere to go.

Did you notice INFLATION didn't get a mention?

[volk666]

It's beyond ironic how this bunch got elected on the platform of fighting the elites and then went to great lengths to save those elites from taxation, and now they are proposing that the poor balance the bill by paying more on their daily necessities.

It's not ironic at all that they are able to sell this "sacrifice" to the poor once again, when the dust from the recent price hikes hasn't even settled.

Thailand progressed to the point where elections are not about performance or reality anymore, they are about catching imagination and selling dreams and Thaksin/PTP are very good at it, devilishly good.

It's not about your life or your income or anything like that, it's about how you feel about yourself. Perhaps I will live to see the day when they print millions of plastic cards certifying that the holders are rich beyond imagination - a brilliant, simple, and cheap solution to the problem of poverty and inequality. In the meantime we have to waddle through intricacies of effects of rice pledging and minimum wage rise schemes - boring and complicated and takes too much of people's time.

Just give everyone Thailand VIP card: "Rich Beyond Imagination", that's all they need. Simple and to the point.

[Valentine]

I am no economic expert but it seems putting this man as head of BOT will enable their coffers to be opened up for plunder. BOT has already been forced to take on a big debt from the financial crisis of 1997 but how many have been prosecuted & sentenced for that debacle including those who had inside knowledge of the devaluation.

As another poster said just increase the tax base. I do not remember the numbers but it is a shockingly low percentage of the population who actually pay tax. There are quite a number of "poor" people running street stalls who are actually making a very good living, much more than the tax free threshold.

[volk666]

But "all Thais will be rich after six months", the six months having expired three months ago, so surely any remaining pockets of poor-Thais are an illusion or political-propaganda ?

Back in the real world, how about reversing the speedily-implemented corporate-tax cut (from 30% to 23%), and funding a cut in VAT instead, or bringing back free hospital-treatment by cancelling the 30B-charge?

One might also point out that, far from taking a decade to build a high-speed railway-system, the Chinese high-speed freight-line was supposed to be up-and-running by 2015, and that (so far as I've heard) nobody has proposed closing the existing rail-network, indeed wasn't there an locally-popular election-promise of an extension from Lampang to Chiang Rai ?

And isn't the planned-capacity of Swampy supposed to be 45 million pax/year, not 36 million ? And the second-phase expansion is already underway, according to announcements earlier this year, so why would the government still need to "come up with an expansion plan", for something which is already happening ?

Seven years ago Thaksin run elections in Bangkok on the promise of a cheap mass transit systems with posters of fancy blue trains nailed to every lamppost even in the areas where no mass transit was planned. How did than pan out? Not a single line completed, not a single station added to MRT. In the end Democrat controlled Bangkok government had to finance BTS extensions from its own pocket.

Seven years, and no one canceled those projects even under the coup government. This is their natural speed, not the promises made by Virabongsa.

Actually the current government HAS canceled a rail-link from China to Malaysia via Laos and Thailand and said that a new line to Chiang Mai is more important. That pissed of a few Chinese who now have to redraw their investment plans for the region but who cares about them and their money, Virabongsa is eying BOT reserves instead, that way he doesn't have to honor any promises or contracts.

[volk666]

...As another poster said just increase the tax base...

How about decrease in govt wasting money on useless multi billion baht policies instead?

Unlike the tax base, the govt ability to generate castle in the sky dreams is unlimited, you will never collect enough taxes to pay for all their promises. Taxes will never catch up, it's arithmetically impossible.

How about instead of ingenuity in collecting taxes the govt turn to moderation in their expenses?

Edited April 28, 2012 by volk666

[OzMick]

It's beyond ironic how this bunch got elected on the platform of fighting the elites and then went to great lengths to save those elites from taxation, and now they are proposing that the poor balance the bill by paying more on their daily necessities.

It's not ironic at all that they are able to sell this "sacrifice" to the poor once again, when the dust from the recent price hikes hasn't even settled.

Thailand progressed to the point where elections are not about performance or reality anymore, they are about catching imagination and selling dreams and Thaksin/PTP are very good at it, devilishly good.

It's not about your life or your income or anything like that, it's about how you feel about yourself. Perhaps I will live to see the day when they print millions of plastic cards certifying that the holders are rich beyond imagination - a brilliant, simple, and cheap solution to the problem of poverty and inequality. In the meantime we have to waddle through intricacies of effects of rice pledging and minimum wage rise schemes - boring and complicated and takes too much of people's time.

Just give everyone Thailand VIP card: "Rich Beyond Imagination", that's all they need. Simple and to the point.

It's a pity they can't make necklaces from Iron Pyrite.

[DP25]

"This would result in additional revenue of Bt60 billion for the country, which would enable us to ease other types of tax collection," he said.

Great news, now they can afford to return the B46 billion to Thaksin, and still have some left over for further tax cuts for the rich and corporations

[animatic]

Another instance of the poor suffering so they think raise the burden on them

to be able to afford giving then inadequate freebies.

Taking from Paul to give Peter too little.

And make it tougher on them borh.

Edited April 28, 2012 by animatic

[animatic]

He also suggested that labour-intensive industry should move to neighbouring countries or they would not be able to survive, as technology would replace manpower in the Kingdom.

Ok thats fine...... Just what do they propose to do with the population after technology takes over?

Send them to red villages to fester.

[Ricardo]

He also suggested that labour-intensive industry should move to neighbouring countries or they would not be able to survive, as technology would replace manpower in the Kingdom.

Ok thats fine...... Just what do they propose to do with the population after technology takes over?

They will still need someone, to polish the robots, I guess.

[Skywalker69]

...As another poster said just increase the tax base...

How about decrease in govt wasting money on useless multi billion baht policies instead?

Unlike the tax base, the govt ability to generate castle in the sky dreams is unlimited, you will never collect enough taxes to pay for all their promises. Taxes will never catch up, it's arithmetically impossible.

How about instead of ingenuity in collecting taxes the govt turn to moderation in their expenses?

They couldn't ´t win the election without this promises.

[Thaddeus]

I am no economic expert

Neither am I, but a blind man on a galloping horse who be able to spot that Virabongsa is as economically astute as the average whelk.

[OzMick]

I am no economic expert

Neither am I, but a blind man on a galloping horse who be able to spot that Virabongsa is as economically astute as the average whelk.

Lawrence did OK for himself.

[otherstuff1957]

PT seems to be acting like reverse Robin Hoods... Tax the poor and give to the rich! I'm sure that Calgary redux will be along soon to defend the policy... he's probably on the phone to New York trying to figure out how.

[geriatrickid]

He also suggested that labour-intensive industry should move to neighbouring countries or they would not be able to survive, as technology would replace manpower in the Kingdom.

Ok thats fine...... Just what do they propose to do with the population after technology takes over?

Have a look at the demographic trends. Thailand is about to face a more severe labour shortage. In plain language, when people make boom boom, babies are not popping out like in the good old days.

[Payboy]

Thats the same story line they pass off in the states more technology less labor intensive jobs. Thats 8 percent unemployement.

No worries on that front. Watching rice grow and lounging in a hammock at the moto-taxi queue are full time occupations here.

[marquess]

Seems that the government is hell bent on increasing inflation when there are already are so many inflationary factors at work already, increase in petrol duty and then using the excuse of high oil prices when in reality they are actually lower than they were four years ago, minimum wage increase, which just leads to higher priced goods. Now if they add vat to that it will only make things worse. As to wanting to raise VAT for the sake of improving the infrastructure previous governments have had years to do that, why are we still using a railway system that is about years old. If they want to find more money they can start by trying to reduce corruption, doesn't help when certain rich people like Thaksins don't pay 12 billion in taxes?

[otherstuff1957]

^ It has seemed to me that the current government has been pursuing inflationary policies since its inception. An astute businessman with foreknowledge of coming inflation could easily position his family's investments in such a way as to profit tremendously from that inflation.

[OzMick]

^ It has seemed to me that the current government has been pursuing inflationary policies since its inception. An astute businessman with foreknowledge of coming inflation could easily position his family's investments in such a way as to profit tremendously from that inflation.

Now all you need is a capital payment moratorium and some taxpayer funded interest reductions. And guess what..................?

[Skywalker69]

The Government handed out credit cards, it will now be more expensive for those receiving this cards, and all others with loans.

The skimming is increasing.

[metisdead]

A post containing overly derogatory and inflammatory comments has been removed.