A proposal to cut import duty on luxury goods has hit a wall after Deputy Finance Minister Benja Louichareon said the move would hurt Thai manufacturers.
She said she had confirmed her stance with Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong during a meeting.
Mrs Benja disagreed with cutting import duty from 30% to 5% or even zero, as there is no guarantee that sellers would cut product prices following the tax reductions.
Manufacturers of air-conditioning units did not reduce prices even though the Excise Department cut the tax from 10% to zero, she said.
The idea of cutting import duty on luxury items was announced by finance permanent secretary Areepong Bhoocha-oom with the aim of promoting Thailand as a shopping paradise for travellers and even Thais who now shop in places such as Hong Kong.
The proposal has received a mixed response from local operators amid ebbing domestic consumption and private investment and weak exports.
Mrs Benja referred to the Customs Department's report that only three goods categories have high import value _ perfumes and cosmetics, fruits except apples, and suits and women's and children's clothing.
Garment imports are taxed at 30%, so any tax cut would certainly affect local producers, she said.
In the first 10 months of the current fiscal year, the import value of perfumes and cosmetics soared 50% year-on-year to 15 billion baht, while fruits rose to 14 billion baht from 11 billion and suits and women's and children's clothing increased to 7.45 billion baht from 6.54 billion.
Promoting Thailand as a shopping paradise hinges on more than tax rates, Mrs Benja said, adding that the profile of products made by Thai operators is the real success factor.
All parties should find a way to encourage foreign travellers to buy Thailand's products or One Tambon One Product goods as gifts or souvenirs, she said.
Mrs Benja said watches, eyeglasses and cameras and lenses are already levied at 5% import duty and are best-selling products among Thais and foreign tourists. The 5% rate seems to be appropriate, as foreigners can claim a 7% value-added tax refund.
It is not justified to think that cuts in import duty can persuade foreign tourists to spend more in Thailand, while local operators could be hurt and some may even have to lay off workers, she said, adding that she fully opposes the idea of a cut.
One retail operator said Thailand should learn from Hong Kong and Singapore, which have higher gross domestic product than Thailand despite fewer resources and lower import duties.
Operators in Singapore and Hong Kong have not gone bankrupt after duty cuts, said the operator.