Luxury import duties face axe
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Luxury import duties face axe

Dubbed final piece in tourism jigsaw puzzle

A proposed waiver on import duties on luxury products could encourage Thais to buy the expensive items at home instead of flying abroad for them, says the Fiscal Policy Office (FPO).

As well, it would promote the country as a shopping paradise.

"Thais are among the world's biggest shoppers, ranking fifth. The Chinese are the top shoppers," said deputy director-general Lavaron Sangsnit, referring to tax-refund statistics from Switzerland's Global Blue.

He said turning Thailand into a shopping paradise would complement the country's status as a cultural and nature destination for tourists.

The tourism industry contributes substantial revenue to the economy, but the proposed duty waiver should also take into account the effect on local manufacturers, said Mr Lavaron.

His comments came after permanent finance secretary Areepong Bhoocha-oom said the government will scrap 30% import duties on some luxury goods such as watches, clothing and cosmetics by year-end to help the country compete with Hong Kong and Singapore.

A Finance Ministry source who asked not to be named said to avert any impact on local producers, the ministry may cut import duties only on some luxury items that are not made in Thailand such as fragrances and high-end watches.

The ministry may solicit these luxury brand producers to relocate their production base to Thailand.

The source said the import duty cut will cost the government hundreds of millions of baht in lost revenue but contribute more through employment, corporate income tax and higher revenue for hotels and restaurants.

The FPO is studying the effects that scrapping import duties would have on local manufacturers, but inadequate information remains a stumbling block.

Meanwhile, leading retailers have welcomed the idea of lowering import duties on luxury products, saying this will help to boost foreign tourist numbers and spending.

Phaibul Kanokvatanawan, chief executive of The Mall Group, called it the last piece in a jigsaw puzzle promoting the country as a tourist destination.

"We have nice tourism sites, excellent accommodations _ the only thing lacking is buying up goods to take back home," he said.

Mr Phaibul estimates the number of foreign travellers could jump to 40 million annually from a projected 25 million this year if the tax cut takes effect.

As well, the government may also liberalise the duty-free industry by letting more than one operator open this type of shop in airports nationwide.

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