Stimulus package vowed within weeks
Cabinet will consider seven measures to jump-start slowing economy
An economic stimulus package containing seven measures worth a combined 20 billion baht will seek the cabinet's approval in the next two weeks with the aim of preventing the economy from losing momentum and growing below its potential.
The highlighted measures are a tax deduction for domestic tourism spending worth up to 15,000 baht, a tax break on spending to buy uniforms, sports equipment and textbooks for students, a similar subsidy for welfare smartcard holders to alleviate parents' burden, and a special mortgage to help homebuyers better access lending, said Finance Minister Apisak Tantivorawong.
Taxpayers who spend up to 15,000 baht on accommodation and tour guides nationwide can deduct such spending from personal income for the 2019 tax year, Mr Apisak said.
The Finance Ministry said recently that tourism spending during the second and third quarters would be eligible for the tax deduction.
Mr Apisak said the ministry is weighing the tax-deductible amount and the size of cash giveaways for spending on student uniforms, sports equipment and textbooks.
Finance officials will delegate GH Bank and the Government Savings Bank to offer the special mortgage to serve strong demand for homes after commercial banks tightened housing loan criteria to comply with the central bank's lending curbs.
Other aid measures include Student Loan Fund privileges for those studying in fields related to 10 targeted industries, aiming to enhance workforce development in the long run; a tax deduction for book purchases; and allowing operators to claim investment in point-of-sale (POS) terminals at 1.5-2 times as an expense to deduct from taxable income.
Mr Apisak said it's essential for the Finance Ministry to launch the stimulus measures because Thai GDP growth is predicted at just above 3% during the first half of 2019. He said enormous resources will be needed to shore up the economy if growth slows to below that level.
The economy is losing steam, dented by the US-China trade spat, which is dealing a blow to global growth, as well as local political uncertainties.
Many research houses and policymakers have cut their forecasts for Thai GDP growth this year to 3.8-3.9%, and those with a more pessimistic view have downgraded estimates to below 3.5%.
Deputy Prime Minister Somkid Jatusripitak said local political uncertainties are eroding people's confidence, stalling investment and crippling the country's economic growth, though the economy remains stable and state spending is still on target.
"During the transition period to the new government, we need to have the stimulus measures to prevent economic growth from slowing and to maintain momentum until the new government takes the helm," Mr Somkid said.
GH Bank president Chatchai Sirilai said he was unaware of exactly what the government wants from the bank to help homebuyers.
The government has requested help with subsidies in the event that it needs the bank to offer a special interest rate or ease lending conditions, which could lead to increased bad loans, Mr Chatchai said.
He said the Finance Ministry must talk to the Bank of Thailand if it wants GH Bank to use more lenient criteria than those prescribed under the central bank's new housing loan rules.