Stimulus preparations underway for 2020
Replacement for LTF on the cards
Thailand is planning additional economic stimulus measures if needed amid bleak forecasts for next year, says Finance Minister Uttama Savanayana.
The IMF forecasts the global economy remains uncertain next year, so Thailand needs to build its domestic economy, he said. Only essential stimuli will be introduced, said Mr Uttama.
In August, the government unveiled a 316-billion-baht stimulus package aimed at boosting economic growth to 3% this year. The measures cover subsidies for the poor, soft loans for farmers and a 1,000-baht cash giveaway and up to 20% in cash rebates under the Taste, Shop, Spend scheme.
He said Thailand needs to ramp up its economy to avoid a downward spiral.
Investment must have specific targets to push the country towards economic change, beefing up competitiveness. But this could become a heavy burden if the state is the sole investor, said Mr Uttama.
The Finance Ministry has estimated 20% of the population will be 60 or older by 2040. The underprivileged must also be taken care of if the country is to develop in a sustainable way, he said.
The bottom-up approach must be applied to the country's development to strengthen the country's foundations, a strategy the IMF has agreed with, said Mr Uttama.
"We must enhance people's skills, showing them not only how to catch fish but also how to add value to said fish," he said.
Mr Uttama said a new tax-saving fund to replace long-term equity funds (LTFs), which are due to expire at year-end, is expected to take shape in the next couple of weeks.
The Fiscal Policy Office (FPO) is considering the details of the new tax-saving mutual fund, which must encourage long-term savings, he said.
Mr Uttama recently said the new fund's lock-up period could be more than 10 years, while a source at the ministry said earlier the new fund would resemble the Sustainable Equity Fund proposed by the Federation of Thai Capital Market Organizations.
The new tax-saving fund's ceiling contribution entitled to a personal income tax deduction will be raised to 30% of annual income, while the maximum amount will be lowered to 250,000 baht to narrow income disparity. Lowering the cap for a tax-saving fund means high-income earners will see less of a tax deduction, while lower-income earners could benefit because the percentage of annual income has been doubled to 30%.
Individual taxpayers are allowed to deduct up to 15% of total annual income, or a maximum of 500,000 baht a year, whichever is lower, for LTF contributions.
The ministry has said high-income earners are reaping a larger benefit than lower-income earners from the 500,000-baht cap.