Raising Thailand’s value-added tax now could adversely impact people’s purchasing power, the head of major business coalition warned Tuesday.
Supan Mongkolsuthee, chairman of the Joint Standing Committee on Commerce, Industry and Banking, said the VAT could be raised without problem if Thailand's economy grew by more than 4%.
However, the committee - comprised of representatives from Board of Trade of Thailand, Federal of Thai Industries and Thai Bankers Association - projects economic growth this year of just 1% and 3.5%-4% next year.
Mr Supan was responding to Monday's remarks by Finance Minister Sommai Phasee that the VAT could soon be raised at least one percentage point. Mr Supan said the government should carefully consider the effects of raising the tax in a weak economy, particularly as it relates to domestic purchasing power.
Many consumers are still saddled with household debt, he said, so they tend to buy more non-durable goods rather than make large purchases. An increase in the VAT may impact their purchasing power, he said.
Not only is Thai gross domestic product expected to be weak this year, exports might might be flat or slightly contract in 2014, the committee projects. A more positive outlook is anticipated for 2015 with exports growing 3.5%.