To heat up local dining and travel during the sweltering Thai New Year season, the government plans to roll out a new tax incentive scheme aimed at sparking a Songkran spending spree amid the languid economic recovery.
The tax measure is intended to entice people to spend the long public holiday (and baht) at home rather than travelling abroad, Finance Minister Apisak Tantivorawong said.
Like last December's temporary shopping tax relief, to take advantage of the scheme, people have to dine at or otherwise shell out at, restaurants, hotels and travel-related companies which can issue tax invoices allowing them to deduct a certain amount from taxable income, said Mr Apisak, without elaborating further.
The measure will be forwarded for the cabinet's approval in the coming weeks.
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The government late last year launched a special tax break allowing individuals to deduct up to 15,000 baht on purchases made during the year-end festive season to spur holiday spending. Taxpayers capitalising on the break raked in 4 billion baht in deductions.
Though the scheme resulted in some state revenue losses, it helped stimulate domestic consumption, with the Revenue Department receiving more in value-added tax (VAT).
Yutthasak Supasorn, the Tourism Authority of Thailand (TAT) governor, said the latest tax measure would help boost spending and drive domestic tourism during the Songkran festival.
He would like to see similar schemes implemented during the low tourist season to boost travel.
Those in the private sector have also shown their support for the measure.
Paisarn Aowsathaporn, executive vice-president for food at Oishi Group Plc, said the government was on the right track to stimulate consumption.
"We will increase our food stock by 30% during the Songkran festival and increase store management efficiency," he said.
Surapong Techaruvichit, president of the Thai Hotels Association (THA), has recommended that the government publicise the tax measure so that people understand and capitalise on it.
Apart from the year-end shopping tax incentive, the Revenue Department had also sought to boost consumption last year with a 15,000-baht travel tax break. The scheme has been extended for another two years.
Crowds throng the tourism fair held to boost domestic travel. A new tax incentive is planned for spending on dining and travelling during the Songkran holiday next month. APICHIT JINAKUL
The measures are aimed at the lower and middle classes, whose spending has not grown over the past 5-6 months due to economic sluggishness.
In another development, Mr Apisak said the Fiscal Policy Office might need to revise its economic growth forecast to 3.7% this year with the slow global economic recovery, as evidenced by the 11% and 25% contractions of China's shipments in January and February, respectively.
The 3.7% economic growth estimate is based on a 0.1% export expansion rate. Mr Apisak is confident, however, that Thai economic growth this year will exceed 3%, compared with last years' growth-rate of 2.8%.
The Bank of Thailand is set to revise the country's economic growth projection this year due to heightening downside risks. The new figure will be released at the end of the month.
The central bank in December cut 2016 growth projection to 3.5% from 3.7% due to a regional economic slowdown, adverse effects from geopolitical conflicts affecting both global demand and tourist confidence and the worse-than-expected local drought, which is taking a toll on agricultural and industrial production.
Mr Apisak said the government had introduced both short and long-term measures to ward off the greater risks of the global slowdown. The long-term measures include big-ticket infrastructure investments -- a set of investment promotion packages and tax incentives for 10 targeted industries -- which are expected to be drivers for the country's S-curve economy.
"The economic foundation this government lays down under the new S-curve model will push Thai economic growth to 4-5% in the next 3-4 years," he said.