Thai Finance Ministry proposes to raise the VAT rate to 10 percent

[webfact]

Finance Ministry proposes to raise the VAT rate to 10 percent

BANGKOK, 10 October 2014 (NNT) - The Finance Ministry has expressed its support to raise the current value added tax (VAT) rate from 7 percent to 10 percent.

Permanent Secretary for Finance Rangsan Sriworasart stated that the VAT increase would generate at least 150-160 billion baht in revenue for the government.

Mr. Rangsan firmly believes that the new VAT rate would not affect low-income earners but it would have more of an impact on the middle-class.

Regarding the ministry’s consideration to adjust the corporate income tax rate from 20 percent to 30 percent, Mr. Rangsan said that it is ultimately up to the government on whether to support such a move or not.

He also stated that case studies need to be conducted, especially on neighboring countries in the ASEAN region.


-- NNT 2014-10-10

[NeverSure]

Yep. Ask merchants and suppliers to make things more affordable for Thais. But those ideas never apply to government.

[noitom]

Thais are thrashing about now with the VAT. Why not raise it to 20% immediately?

[EricBerg]

Returning happiness to the people. Raise taxes.

[daveAustin]

Mr. Rangsan firmly believes that the new VAT rate would not affect low-income earners

BS, it affects everybody but the monkhood and anyone else living on handouts. The only way it wouldn't affect low income earners would be if they were exempted from paying the extra on goods and services.

Thailand is already approaching or surpassing the cost of first world countries for many things. Is it trying to masquerade as them in everything but substance?

[nong38]

Not sure how it will affect middle classes more than the poor, unless we are saying that the poor cannot afford to go into shops that pay VAT. It would be interesting to know how many shops are registered for VAT and how many are not, but I expect its very much like fill in a tax return and pay tax or dont fill it in and dont pay tax, bit of s tumper what to do.

[JoePai]

If they collected all the VAT due they may well be able to lower the rate not raise it.

[modafinil]

<deleted>

Edited October 10, 2014 by modafinil

[jaltsc]

"Mr. Rangsan firmly believes that the new VAT rate would not affect low-income earners but it would have more of an impact on the middle-class."

Typical "head in the sand" thinking, so common with the upper class when out of touch with the economic classes below them. There's a big difference in percentage of income spent when one makes (in contrast to "earns") a few hundred thousand baht a month vs. 9,000 per month. He has no idea that a slight increase in oil prices will be a great financial burden to the average farm worker's financial ability to fill his motor bike's tank.

The one thing that will probably result from such and increase is a thriving black market in many products. Of course, that will benefit the rich, since they are usually the ones who run these markets and hide their incomes, resulting in zero tax collected.

Probably, a better solution is to educate the populace and create higher paying jobs to decrease imports and increase exports. Then, 7% will add up quickly when people have more disposable income to purchase higher priced goods.

Edited October 10, 2014 by jaltsc

[worgeordie]

Every time the VAT goes up,manufacturers take the opportunity to raise prices

at the same time,people are struggling to make ends meet at the moment.getting

into debit just to live.

There was an article on here about VAT fraudsters, using false invoices to claim

Billions of Bhat back,the government needs to stop things like that plus other

corruption,like been overcharged for goods and services,before raising VAT,now

is not the time.

regards Worgeordie

[Mango Bob]

So the people have to pay more taxes but does not have the right to vote for the people who increase there taxes. Isn't there an old saying "No taxation without Representation"

[Pib]

The new & improved govt wants to raise VAT, implement inheritance tax, and implement land tax....and it seems raising excise tax on various items like tea drinks keeps popping up....and lets not forget LPG prices being raised.

The govt want to lower the cost of living and return their happiness. Yes sir, lower costs and better living through higher taxes...a strange way to lower prices and return happiness.

[webfact]

Finance supports VAT increase



BANGKOK: -- Finance Ministry has voiced support for the increase of the current value added tax (VAT) rate from 7 percent to 10 percent.

The ministry’s permanent secretary Rangsan Sriworasart said that the VAT increase would generate at least 150-160 billion baht in revenue for the government.

He assured that the 10% VAT rate would not affect low-income earners but would impact the middle-class income earners.

Regarding the ministry’s proposal to adjust the corporate income tax rate from 20 percent to 30 percent, he said that it is up to the government on whether to support such a move or not.

However Mr Rangsan stated that case studies need to be conducted on comparison especially on neighbouring countries in the ASEAN region.

(Photo : ThaiPBS file)

Source: http://englishnews.thaipbs.or.th/finance-supports-vat-increase/


-- Thai PBS 2014-10-10

[casualbiker]

Perhaps the current government has to raise money to repay and absorb all the debt from previous governments. Also as a side note V.A.T has been 10% for a long time it's just been on a temporary reduction!

http://www.doingbusinessthailand.com/blog-thailand/doing-business-in-thailand/thailand-taxes/thailand-taxes-introduction-to-thai-vat.html

[JOC]

150-160 billion to share amongst the fat cats!!

Returning happiness to the people, my backside!!

Looking forward to posters suffering from the-strong-man-syndrome defending this one.

[puck2]

....Permanent Secretary for Finance Rangsan Sriworasart stated that the VAT increase would generate at least 150-160 billion baht in revenue for the government.

Mr. Rangsan firmly believes that the new VAT rate would not affect low-income earners but it would have more of an impact on the middle-class.

Maybe, the permanent secrettary didn't read or hear what just happened in Japan after a VAT-rise by 3%, up from 5%. Headline: Japanese economy flounders after sales tax rise.

It's a shame that a PS of the FM doesn't know the negative effects of a VAT-rise. It especially hits the poor by higher prices. Or the companies lower the volume of the products they sell, a hidden price increase.

I don't know if rooms for rent are tax free. Let me assume, someone (poor) earns 10.000 Baht per month and pays 2.000 Baht for the rent. Then 1% is 80 Baht per month, 960 baht per year. Not much for you and me, but for the poor. This loss doesn't include the normal reaction

"Every time the VAT goes up,manufacturers take the opportunity to raise prices" (#10, worgeordie)

So this poor people would lose at least 1.000 baht per year or more.

Mr. Secretary, no affect on low income earners, and are you sure that the sales will not go downwards?

[Dogmatix]

It's obvious that they have to do this because the tax take is far too low. This is a very substantial increase in tax revenue that can be collected immediately without any additional cost. Inheritance tax and land tax are just playing around at the edges to create an impression of fairness.

I am puzzled as to why it won't affect the poor who spend all they earn and therefore pay VAT on their entire incomes. Wealthy and middle class people get to save some of their earnings and don't pay VAT on it until they spend it. They also get to spend some of their income abroad and don't pay Thai VAT on that, although they might have to pay foreign VAT or sales tax. Another complete nonsense statement from a Thai government official.

[Gunna]

Wrong headline - should say propose to return to the original rate before 1997

Thailand official VAT rate is actually 10% not 7%. But VAT rate was reduced to 7% as part of the economic measures taken following the crisis of 1997. The reduced rate of 7% has been since then confirmed every year.

the following are all exempt from VAT

• Educational services including government and private school
• Audit services
• Medical services
• Health care services including government and private hospitals and clinics
• Domestic transportation
• Renting of immovable properties

sale of agricultural produce, animal and animal feeds, fertilizer, chemical products for eradicating weeds, sale of newspaper, inland transport service, rental of immovable property; or under (2) Section 81 (2) such as sale of agricultural produce, animal and animal feeds, fertilizer, chemical products for eradicating weeds, sale of newspaper, etc.

Finally are exempted from the VAT small business where tax base does not exceed 1,800,000 Baht.

So the poor probably only pay VAT on purchases alcohol, cigarettes and purchases at 7-11 ( and if poor probably shouldn't be shopping at 7-11s

[Bluespunk]

"Mr. Rangsan firmly believes that the new VAT rate would not affect low-income earners"

Really?

Would he care to explain how that will be then?

Does he actually know what VAT is?

[Thai at Heart]

Mr. Rangsan firmly believes that the new VAT rate would not affect low-income earners

BS, it affects everybody but the monkhood and anyone else living on handouts. The only way it wouldn't affect low income earners would be if they were exempted from paying the extra on goods and services.

Thailand is already approaching or surpassing the cost of first world countries for many things. Is it trying to masquerade as them in everything but substance?

Much of what is bought by the poor has no VAT added. I.e. market stalls etc don't charge vat.

[Thailand]

Smacks of a way to help compensate from downward spiralling income from other sources.

[ramrod711]

High living cost causes highest stress among Thai people

Finance Ministry proposes to raise the VAT rate to 10 percent

I'm not sure, but raising taxes on people who are already financially stressed to the breaking point, may not help.

[Ozziepat]

The usual: Governments look at the difference between their grandiose plans and modest available funding and define the situation as a revenue shortfall rather than a spending addiction. Thus begin perpetually increasing taxes and debt. This government is no different, except any Nay-sayers have been momentarily silenced and what remains is a complacent crowd marching in lockstep toward a pseudo-Keynesian-inspired fiscal cliff.

[chainarong]

The Finance Ministry should sit back and analyse and then make media stops, with prices pushing upwards through the junta's great fuel program , international conditions and normal price pressure, the extra vat tax would improve the inflation rate no end, that's when prices start rising weekly , so before you completely ruin the economy, think, as for who this extra tax will affect, the lower end of town will suffer the most, as they will be priced out of items that possibly they can just afford now, just because they don't have the spending power it is naive to think that as a collective they don't have clout.

[Thai at Heart]

Didn't they recomment only a month ago that there was no need for an increase

[samran]

This isn't rocket science.

The official Vat is 10% and has been discounted to 7% for a while now.

VATs tend to regressive taxes impacting the poorer more than the rich, given proportionally more of a poorer persons income is going to be spent on goods and services.

An easy way to compensate for that is to raise he tax free threshold for the lowest income earners, or some small transfer payment.

[brain150]

Could anybody please enlighten me as to WHY there is VAT at all ???

... if the Government would issue the money by themselves instead of borrowing it from

banks then NOBODY would need to pay ANY TAX AT ALL !!!

[just like in ALL other countries !!!]

Anybody has an answer or suggestion ?

[samran]

Could anybody please enlighten me as to WHY there is VAT at all ???

... if the Government would issue the money by themselves instead of borrowing it from

banks then NOBODY would need to pay ANY TAX AT ALL !!!

[just like in ALL other countries !!!]

Anybody has an answer or suggestion ?

Um,

The Bank of Thailand issues currency.

You have a VAT as it is a broad based tax catching most parts of the economy in both goods, but more importantly services.

The broader the base, the lower the overall tax rate has to be. It also provides flexibilty, the less you consume the less you are taxed.

[oneday]

A 3% rise in taxes is draconian and will certainly be felt by everyone. It would be a lot easier to swallow 8%, but 10% is simple stupid.

[jdinasia]

Wrong headline - should say propose to return to the original rate before 1997

Thailand official VAT rate is actually 10% not 7%. But VAT rate was reduced to 7% as part of the economic measures taken following the crisis of 1997. The reduced rate of 7% has been since then confirmed every year.

the following are all exempt from VAT

• Educational services including government and private school
• Audit services
• Medical services
• Health care services including government and private hospitals and clinics
• Domestic transportation
• Renting of immovable properties

sale of agricultural produce, animal and animal feeds, fertilizer, chemical products for eradicating weeds, sale of newspaper, inland transport service, rental of immovable property; or under (2) Section 81 (2) such as sale of agricultural produce, animal and animal feeds, fertilizer, chemical products for eradicating weeds, sale of newspaper, etc.

Finally are exempted from the VAT small business where tax base does not exceed 1,800,000 Baht.

So the poor probably only pay VAT on purchases alcohol, cigarettes and purchases at 7-11 ( and if poor probably shouldn't be shopping at 7-11s

Isn't fuel also not taxed with VAT?