The cabinet yesterday approved the much-awaited shopping tax break, a short-term measure to stimulate year-end domestic consumption.
The government expects the festive tax break will catalyse 20 billion baht of spending from Dec 14-31 and add 0.2% to Thailand's gross domestic product (GDP) growth this year.
The tax incentive will allow each individual taxpayer to deduct the value of domestic purchases of goods and services from personal income taxes during Dec 15-31, an increase of 11 days from last year's seven days.
The tax deduction will be capped at 15,000 baht, as it was last year.
The offer is not valid for purchases of liquor, beer, wine, tobacco, vehicles, motorcycles, ships or fuel for vehicles and ships.
The measure also omits purchases of lodging and tour packages, as the cabinet just recently approved tax measures for domestic tourism.
On Nov 29, the cabinet approved a reinstatement of tourism stimulus measures, including a 15,000-baht tax break on domestic tour packages and hotel accommodation for individual taxpayers.
The measures are intended to entice people to spend the long public holiday at home instead of abroad. They also aim to spark a year-end spending spree as the economy dips, and offset the impact of the government crackdown on "zero-dollar" tour operators and the subsequent drop in Chinese tourists.
The measures are also intended to encourage tour and hotel operators to register as the law requires.
The tourism stimulus scheme runs from Dec 1 to Dec 31 and is expected to result in an economic multiplier effect worth 1 billion baht.
Kobsak Phutrakul, assistant minister to the Prime Minister's Office, said the government expects to lose about 3.2 billion baht worth of revenue.
The government estimates that about 2 million taxpayers are eligible for the shopping tax breaks this year.
Executives at Central Group and The Mall Group agreed that the tax break will boost additional sales in a range of 20-40%.
In the meantime, budget disbursement outpaced the target by 2.4% for the first two months of fiscal 2017, adding to the possibility that the disbursement will achieve the October-to-December quarter target.
State agencies between October to November withdrew 571 billion baht in budget, representing 20.9% of the 2017 annual budget expenditure at 2.73 trillion, said Oranuch Vinusit, a spokeswoman for the Comptroller-General's Department.
Of the total withdrawn budget, 521.5 billion baht was regular budget and the remaining 49.3 billion was for investment.
"The department will accelerate budget disbursement in the first quarter of fiscal 2017 to make the government's target reachable and proceed with the economic stimulus in accordance with the government's policy," Ms Oranuch said, adding that the budget disbursement for the first quarter will meet the target.