Korn puts money to work
Package to maximise value of every baht
- Published: 13/01/2009 at 12:00 AM
- Newspaper section: News
New economic stimulus measures mean that more than 10 million employees nationwide will end up with more cash in their pockets, Finance Minister Korn Chatikavanij said Monday.
Korn: Cabinet to review programme
Mr Korn said the new measures to be introduced over the next few weeks would include tax breaks specifically targeting key groups, including salaried workers and civil servants.
"The 10 million people who will receive benefits under this programme include people of all stripes, from those in rural areas to civil servants nationwide," he said during a television interview on Monday.
Mr Korn did not elaborate, saying only that the final programme would be reviewed by cabinet next week.
But he ruled out cuts in value-added or corporate taxes.
Reducing value-added tax, now set at 7 per cent, would be a costly measure for the government, as each percentage point cut would cost the state up to 70 billion baht in lost revenue a year. Similarly, a five percentage point cut in the corporate rate of 30 per cent would lead to up to 60 billion baht in lost revenue.
More importantly, Mr Korn said, was that neither a reduction in VAT or corporate taxes would guarantee maximum benefits in stimulating the economy or assisting ailing firms or households.
While it was understood that added fiscal spending was needed to help the local economy survive the global crisis, spending policies had to strive for maximum efficiency and utility.
"Right now, we need to acknowledge that the public sector has a huge role in stimulating the economy. Every baht is crucial, and we need to consider where that baht, in the hands of the public or in the hands of the government, can have the greatest value to the overall economy," Mr Korn said.
Economic growth this year is projected to slow to 0-2 per cent, or less than half the estimated 4 per cent growth posted in 2008.
The new Democrat party-led government of Abhisit Vejjajiva has made easing unemployment and assisting low-income groups a priority, and last week agreed to extend for six months subsidised public utilities for poor households.
Energy Minister Wannarat Charnukul Monday said the ministry was considering spending eight billion baht to extend subsidies for low-income households.
Households that use less than 100 kilowatt-hour units of electricity a month could have their bills waived entirely, he said.
The measure would potentially benefit nine million registered electricity users out of a total of 15 million nationwide.
Existing subsidies, first initiated in mid-2008 by the Samak Sundaravej government, waived power bills for those using less than 80 units per month and offered 50 per cent discount for additional power used of up to 150 units a month.
Mr Wannarat said extending the subsidy programme would directly benefit the poor.
"While oil prices are low today, people are still feeling the impact. The government wants to help reduce the cost of essential expenses for the poor," the minister said.
Mr Wannarat said the ministry may limit the subsidy programmes to households using low-power appliances, such as rice cookers, fans or fridges, to ensure that only the truly needy receive the benefits.
Medium to large households with air conditioners or washing machines should not benefit from the programme, he said.
The government would also extend subsidies for liquefied petroleum gas (LPG) prices only for households, with the price fixed at $332 per tonne.
Prices of LPG used in the transport and industrial sectors, however, would be allowed to rise and move closer to market rates.
While free electricity for low-income households would continue, the fuel tariff (Ft) rate starting from January to April would rise by 5 per cent to 3.17 baht a unit from 3.02 baht for the previous period, said the Office of the Energy Regulatory Board.
Direk Lavansiri, chairman of the board, said the panel approved an Ft rate hike of 0.1485 baht a unit to 0.9255 baht Monday.
This does not yet reflect the real cost increase, which should be raised by about 0.1722 baht per unit in line with the rise in natural gas prices.
About the author
- Writer: Wichit Chantanusornsiri and Yuthana Praiwan
