Connect with us


VAT hike will give more room for budget deficit: Sommai

Legacy Phuket Gazette



VAT hike will give more room for budget deficit: Sommai | Thaiger


– Thailand news selected by Gazette editors for Phuket’s international community

VAT hike will give more room for budget deficit: Sommai
The Nation / Phuket Gazette

PHUKET: The Finance Ministry is likely to increase the value-added tax (VAT) by at least 1 per cent at the end of next year, giving it room to widen the budget deficit by more than Bt300 billion in fiscal 2016, above the 12-13 per cent in the current (2015) budget.

Presently, the VAT rate is set at 7 per cent.

“The increase of VAT by 1 per cent, however, should be enough, as that is the minimum rate of increase,” Finance Minister Sommai Phasee said.

While public debt at 46 per cent of gross domestic product is still relatively low and international reserves are still high, it would mean the government could afford more off-budget borrowing, he said.

The government has adopted a budget of Bt2.575 trillion for fiscal 2015 with a deficit of Bt250 billion or 1.9 per cent of GDP along with a state enterprises budget of Bt300 billion.

More investment planned

Sommai told investors at the “Asia Wealth Forum 2015 Investment Outlook”, organised by Asia Wealth Securities yesterday, that since the political situation had returned to stability, the government could and would definitely invest more, especially in transport infrastructure, water management projects, and social welfare such as health and education. These investments would require the government to have a bigger budget.

Planning for the 2016 budget will begin in the middle of January 2015.

“The government budget could be increased to Bt2.88 trillion in 2016 from Bt2.57 trillion in 2015, an increase of at least Bt300 billion, to support the government’s investments, which will definitely increase in the years to come,” he said.

“The reform of the tax structure would allow the government to have more income in 2015 and 2016. I expect the income from tax in 2016 to increase by 12-13 per cent after the reform process is complete. Meanwhile, the government budget deficit in 2016 should be the same as in 2015, but in my mind, it could increase to Bt300 billion,” he added.

Sommai explained that an expansionary policy for the government’s budget is necessary as most of the outflows leading to the budget deficit in 2015 are interest payments for the Financial Institutions Development Fund and the debt from the rice-pledging scheme and were not for government investments. He said the deficit would need to be widened to cover the increase in the proposed investments.

“If we are going to invest for the future, we have to dare to increase our loan budget and we still have a good enough credit reputation to borrow more,” he said.

He added that to support the budget expansion, we would have to increase taxes also from the introduction of land and construction tax and VAT, which would be done by the end of 2015 fiscal year.

Pichit Akrathit, chairman and chief executive officer of Asia Wealth, said the government should delay the VAT rate increase to beyond 2015 to stimulate the economy next year, as the VAT increase could slow down domestic consumption, which is still needed for economic expansion next year.

— Phuket Gazette Editors


Want more from the Thaiger family?

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

Leave a comment below or join the discussion on Thaiger Talk Forums.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Read more headlines, reports & breaking news in Thailand. Or catch up on your Thailand news.

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Thailand17 mins ago

PM Prayut Chan-o-cha says drug suppression should to be a national priority

Thailand1 hour ago

Purchases of fancy street lamps being investigated for possible corruption

Thailand2 hours ago

Thailand News Today | BKK parks re-open… nearly, tropical storm, airport security upgrade | June 14

Phuket Sandbox July 1st


Thaiger is getting behind local businesses for the restart of tourism in July - up to 50% discounts across all advertising packages in June!

Sponsored by image

Thailand2 hours ago

Missing fisherman’s body found in sea off Nakhon Si Thammarat

Coronavirus (Covid-19)2 hours ago

CCSA: We’re out of vaccines

Coronavirus (Covid-19)3 hours ago

Ayutthaya hospital to test all staff for Covid after 18 test positive

Thailand3 hours ago

13 teenagers arrested in Chon Buri for partying, gathering

Crime3 hours ago

Crime Suppression Division seizes dozens of illegal firearms in a series of raids

Crime4 hours ago

Marijuana valued at 10 million baht seized in Nakhon Phanom, 2 arrested

Coronavirus (Covid-19)5 hours ago

Monday Covid Update: 3,355 new cases, provincial totals

Coronavirus (Covid-19)5 hours ago

Almost 100% of teachers and staff vaccinated in Bangkok

Thailand6 hours ago

Almost 8 million register for stimulus scheme, app briefly goes down

Best of6 hours ago

Top 5 best temples in Bangkok

Thailand6 hours ago

Good Morning Thailand | What’s happening in Pattaya, Phuket sandbox, reopening for tourism

Coronavirus (Covid-19)6 hours ago

25 vaccination sites put on hold in Bangkok

Thailand3 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism3 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket3 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism4 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand4 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism4 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand5 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand5 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand5 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand5 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand5 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand5 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand5 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand5 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand5 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8