EDITORIAL
The "six months, six measures" economic package announced Tuesday by the government of Prime Minister Samak Sundaravej will without doubt be welcomed by the poor and those in the middle-income bracket.
The package _ or, in other words, handouts _ will provide breathing space for at least six months to people already hard pressed by the runaway cost of living fuelled by the seemingly unstoppable rise in oil prices.
Beginning July 25, motorists will pay 2.71 baht, 3.88 baht and 3.33 baht less per litre for diesel, gasohol 95 and gasohol 91, respectively. Altogether, some 20 million motorists will benefit from this unexpected generosity of the government.
Then, starting August 1, Bangkok's commuters will have the choice of free bus rides on 800 non-airconditioned buses provided by the debt-ridden Bangkok Mass Transit Authority, while people throughout the country can enjoy free train rides to any destination in the country in third-class carriages. Small households which use less than 50 cubic metres of tap water and 80 units of electricity a month will no longer have to pay their utility bills, while users of between 81-150 units of electricity will be given a 50% discount. On top of that, the price of cooking gas will be frozen for six months.
The entire package will cost the government about 47 billion baht in taxpayers' money over six months. While a few economists acknowledge the handouts as a necessary relief during crunch times like these, other political scientists caution that the scheme is non-productive and populist.
Despite steadfast denials by the government _ that the package is not meant to curry favour among the public ahead of the next general election, which is speculated to be held some months from now _ the "six months, six measures" economic package has a semblance of the populist policies initiated by the defunct Thai Rak Thai party.
Immediate public reaction to the package has been quite positive. The generous handouts are being warmly embraced, despite warnings by some concerned academics that the package might send the wrong signal to the populace. Overall, it constitutes a boon for the government at a time when its popularity is on the wane as a result of a series of legal misfortunes implicating party heavyweights and the mishandling of the Preah Vihear temple issue. Whether this popularity surge will persist until election day and translate into votes remains to be seen.
Actually, the handouts are not free at all but will be borne by the taxpayers. The excise cuts for cheaper diesel and fuel for motorists will mean a shortfall of 26 billion baht in excise tax collection. In the meantime, the free bus and train rides, as well as free tap water and lower power bills, will add another 20 billion baht to the financial burden of the BMTA and the metropolitan and provincial electricity authorities. Somehow the burden will have to be compensated by the government or, more accurately, by the taxpayers otherwise the public utilities will be in deep financial trouble.
To sum up, the government's economic package is meant for short-term economic and political gains. It should not be expected to stimulate the economy in a sustainable way. There is the risk, moreover, that it may send the wrong signal to consumers that the government will always come to their rescue in times of need, instead of forcing consumers to adapt and be more considerate in their spending.
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