VAT 'present' has academic 'speechless'

VAT 'present' has academic 'speechless'

Nipon Poapongsakorn, a top analyst at the Thailand Development Research Institute says flatly the only reason for a 5% holiday VAT refund is to gain 'favourable benefits [for some political camps] ahead of the election'.
Nipon Poapongsakorn, a top analyst at the Thailand Development Research Institute says flatly the only reason for a 5% holiday VAT refund is to gain 'favourable benefits [for some political camps] ahead of the election'.

Thailand Development Research Institute (TDRI) academics have expressed dismay at the Finance Ministry's plan to grant a 5% value-added tax (VAT) refund to shoppers spending up to 20,000 baht from Feb 1 to Feb 15 next year.

"I am speechless about it," said Nipon Poapongsakorn, a distinguished fellow of the TDRI.

VAT was first introduced in 1992 at a rate of 10%, but was slashed to 7% in late 1997 at the private sector's request. The rate has been kept at 7% ever since.

The ministry's claims that the measure is needed to stimulate the economy are unsound since the current situation is not bad, he said, adding that the National Economic and Social Development Board and Bank of Thailand indicate the economy is projected to grow by more than 4% this year.

"The ministry should roll out lavish measures only when crises come," said Mr Nipon.

"I can see only one reason. It will give favourable benefits [for some political camps] ahead of the election," he said.

He also urged the ministry to explain how it would offset VAT losses and asked the ministry to adhere to fiscal discipline.

"Even though the measure might create happiness today, it could foster hardship in the future," said Mr Nipon. "I also do not think this measure will be the last. It is likely that the government and the Finance Ministry will roll out further measures as the election draws nearer."

Shoppers eligible for the VAT refund must have made their purchases with debit cards linked to PromptPay.

The VAT refund window coincides with Chinese New Year, which falls on Feb 5 next year.

Somchai Jitsuchon, another academic at the TDRI, said the measure should only be applied to low-income earners who hold welfare cards.

"The return [of VAT] to debit card holders without knowing levels of their income would mean that middle- and high-income earners would also be entitled," said Mr Somchai.

The measure is one of a raft of so-called "stimulus" initiatives unveiled by the administration, which critics say are designed to give the upper hand to pro-regime parties prior to the election tentatively set for Feb 24 next year.

Another concern is the distribution of mobile phone SIM cards with free internet access to welfare card holders.

Takorn Tantasith, secretary-general of the National Broadcasting and Telecommunications Commission (NBTC), said his agency and the Finance Ministry are discussing how the measure would take shape in practice.

The NBTC, he said, proposed that instead of handing out SIM cards, the government could add money to the SIM cards low-income earners already have or deliver top-up cards to them.

It is likely that they would receive assistance worth 50 baht a month, he said, adding the approach would be proposed to the NBTC board by this month.

NBTC deputy secretary-general Korkij Danchaivichit meanwhile conceded there are some concerns, including how to ensure the top-up cards would really only be used by low-income earners.


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