Kittiratt warns of price hikes

Kittiratt warns of price hikes

Dems say budget places deficit burden on public

Finance Minister Kittiratt Na-Ranong yesterday warned the public to brace for the cost of living to rise further, but said the government will work to cushion the impact by implementing policies to boost incomes.

Mr Kittiratt made his statement on the first day of the 2014 Budget Bill debate in the House.

He was responding to Democrat leader Abhisit Vejjajiva's criticism that the government's economic policies have caused the people to suffer due to the rising cost of living.

Mr Abhisit condemned the government for cutting spending for 2014 by 50 billion baht, barely putting a dent in the 300-billion-baht deficit from the 2013 fiscal year.

He also blasted the Yingluck Shinawatra administration for trying to narrow the budget deficit by raising diesel and cooking gas prices, thereby passing the burden on to the public.

He said the government plans to collect excise tax of 1.5 baht per litre on diesel starting from Oct 1, 2013, the beginning of fiscal year 2014.

Thailand uses around 20 billion litres of diesel each year, so 30 billion baht will be added to the government's coffers by this tariff, he said.

"This is the first gift that the government will give to the public. With rising diesel prices, costs for the private sector will rise and the prices of goods will also increase," Mr Abhisit said.

As for the planned increase in cooking gas prices by the Energy Ministry, Mr Abhisit said the public will have to pay around 10 baht more for a kilogramme of cooking gas, or liquefied petroleum gas (LPG), by next year.

He said his party believes cooking gas is important to the public and they should be able to use it at cost price, while the government wants to hike the rate to match the price of LPG used in the transport sector, and later raise it further to the level for industrial users.

Assuming Thailand consumes around 3 billion kilogrammes of cooking gas a year, another 30 billion baht would be collected as government revenue, Mr Abhisit said.

Mr Kittiratt responded by saying LPG prices had to go up after subsidy cuts, a move necessary to reflect true costs.

"It is not that we are abandoning low-income earners. We want them to be aware of the real costs and to start making changes," he said. "Consuming some products at prices which are too cheap may lead to excessive consumption. Some government policies are aimed at discouraging excessive consumption."

The government proposed spending of 2.525 trillion baht with revenue projected at 2.275 trillion baht, resulting in a 250-billion-baht deficit.

Mr Abhisit added the government is encouraging the public to pile up debts. He said the new women's development fund is an example, with 80% of the fund used as loans for women instead of spending on women's development.

The government is also emphasising investment in megaprojects and spending on populist policies such as the rice pledging scheme. With this budget planning, economic growth is not sustainable, he said. Instead, wealth is concentrated among only a small group of people, leaving the majority in poverty.

At the beginning of the debate, Prime Minister Yingluck said in her budget presentation that it will spur economic growth of 4-5% while inflation should stay at 2.7-3.7%. She said 2013 economic growth is projected at 4.2-5.2%, with inflation remaining at 2.3-3.3%.

Economic growth will be supported by a recovery of Asian and global economies, boosting exports in the second half of 2013 until 2014, she said.

Growth in fiscal year 2014 will also be supported by a rebound in demand for electronic products in the US market, which is expected to revitalise the electronic sector in Thailand, she added.

The private sector also has plans for expansion, as shown by the number of applications to the Board of Investment for investment privileges, she said.

The 2014 Budget Bill has two purposes _ to solve economic and social issues through implementation of projects carried over from the 2013 budget, and to prepare for the Asean Economic Community, Ms Yingluck said.

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