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Suchart downplays need to cut taxes at this time
Bangkok Post – 12 November 2008
WICHIT CHANTANUSORNSIRI
Finance Minister Suchart Thada-Thamrongvech has played down hopes for any immediate relief for individual and corporate taxpayers, saying that authorities needed to balance any benefits to the economy with the need to maintain budget discipline. Private economists and business groups have called on the government to consider cutting corporate and personal income taxes to help offset the slowing economy.
But Dr Suchart said yesterday that tax cuts would be ''difficult to do'', considering the impact on the overall budget.
He said however he supported tax reform in the long-run to help strengthen the country's competitiveness.
''I do believe that an overhaul of the tax system is needed in the long-run. Lower taxes will help the economy grow and boost household income, which in turn will help expand the overall tax base,'' he said.
According to the consultancy KPMG, Thailand's corporate tax rate of 30% was higher than the global average of 25.9% and exceeded rates in neighbouring Malaysia, Vietnam and Singapore.
Personal income taxes in Thailand had an effective rate of 24% for workers earning $100,000 per year, compared with 31% for the Philippines and Vietnam and 21.8% for Malaysia.
Dr Suchart noted that the government was already committed to increasing the 2009 budget deficit by another 100 billion baht to finance jobs programmes. The additional funds will boost the budget for the year ending September 2009 to 1.935 trillion baht, with a projected deficit of 349 billion.
But the deficit could rise even higher if the slowing economy further undermines tax and government revenues. Revenues in September fell 9.4% under target, due largely to declines in excise tax collections.
''How long we will need to run budget deficits depends on the global economy, and how quickly things can turn around,'' Dr Suchart said. ''If the environment improves, we will not have to run a deficit.''
Cabinet ministers asked Olarn Chaipravat, a deputy prime minister, to chair a committee aimed at accelerating spending by government agencies, particularly state enterprises. Investment spending by state enterprises amounted to just 40% of the 132 billion baht set aside in the 2008 budget.
Dr Olarn will also be responsible for co-ordinating between the Bangkok Metropolitan Administration and the Mass Rapid Transit Authority of Thailand to finalise responsibility for the planned Green mass transit line.
Authorities have set aside 16.4 billion baht for civil construction for the Green line for the route from Mor Chit to Saphan Mai, and another 15.1 billion for Soi Baring to Samut Prakan.
The cabinet yesterday also agreed in principle to revive the Thai Trade Representative programme, an initiative started in 2001 by the Thaksin Shinawatra government but that was all but abandoned following the 2006 coup. Trade representatives are appointed by the government to co-ordinate trade policies between the government and the private sector.
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