Cabinet affirms wage hike, relief measures

Cabinet affirms wage hike, relief measures

A market coolie shoulders a heavy load. Cabinet finally approved the new minimum wage package but at the last second threw in a large tax break for business in order to sell it. (File photo)
A market coolie shoulders a heavy load. Cabinet finally approved the new minimum wage package but at the last second threw in a large tax break for business in order to sell it. (File photo)

The cabinet on Tuesday endorsed the daily minimum wage hike nationwide from April 1, an increase of 5-22 baht as approved by the tripartite national wage committee on Jan 17.

It also endorsed three relief measures to ease the impact of the wage hike and upgrade the competitiveness of small and medium-sized enterprises (SMEs).

Nathporn Chatusripitak, a spokesman for Deputy Prime Minister Somkid Jatusripitak, said the measures include tax incentives that let SMEs deduct tax expenses for minimum wages paid to employees, up to 1.15 times from 1 at present, an adjustment that can absorb employment costs of 9-10 baht a day per employee.

The new tax deduction takes effect April 1, running to the end of the year.

Only SMEs with annual sales of at least 100 million baht and 200 or fewer employees can enjoy the tax privilege, and wages exceeding the minimum cannot be claimed.

"The tax-deductible expenses offered make up half the rate of the minimum wage increase and are estimated to help absorb employment costs of 9-10 baht a day per employee for SMEs," Mr Nathporn said.

He said another measure is the SME relief plan proposed by the Industry Ministry. The ministry plans to allocate 5 billion baht from its fiscal 2019-20 budgets to increase the productivity of more than 50,000 SMEs and reduce their costs by 10% over the next three years.

Of the total budget, 500 million baht would be financed by fiscal 2018 budget, 2.5 billion baht from fiscal 2019 and 2 billion baht from fiscal 2020.

The measure aims to encourage SMEs to use more machinery, implement training programmes, buy materials and acquire managerial talent. The programme will be implemented by the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) and the Industry Ministry, which will jointly screen SMEs that could join the programme.

In fiscal 2018, the ministry will focus primarily on 100 companies in 25 large provinces, 60 companies in 33 mid-sized provinces and 28 SMEs in 19 small provinces.

The initiative will help SMEs manage production costs, one of the main constituents of companies' operating costs.

Mr Nathporn said the cabinet also approved the BoI special privileges given to SMEs to help increase their productivity.

SMEs that invest in using machinery and apply digital upgrades and the Internet of Things will be entitled to corporate income tax exemptions for three years.

SMEs that have higher expenses for human resources to improve skills for high tech will also be eligible for a 200% tax deduction on expenses from corporate income.

Kalin Sarasin, chairman of the JSCCIB, said the private sector has to accept decisions made by the government, which has rejected its request to reconsider the new wages.

A group of business leaders last week called on the government to review the daily minimum wage hikes, saying the hikes will hurt SMEs, farms and the service sector.

They also called on the government to decide the wage hikes based on the discretion of each provincial wage committee and the economic conditions of each province.

"We have to continue struggling ourselves and fighting to stay float," Mr Kalin said. "We may shift to using more machines instead to ease the impact of higher wages."

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