Stimulus package proposal due today
The Fiscal Policy Office is todayexpected to propose to Finance Minister Chalongphob Sussangkarn a stimulus package before it is forwarded on Friday to an economic committee chaired by Deputy Prime Minister Kosit Panpiemras, says an informed source.
The proposal, however, has only a slim chance of being approved, the source said. The tentative stimulus package includes a proposal to cut the corporate income tax from 30 per cent to 20 per cent and increase value-added tax (VAT) from 7 per cent to 10 per cent, said the official. The corporate tax cut is aimed at boosting foreign direct investment, since other Asean countries, such as Singapore, have lower tax rates, said the source. Meanwhile, the proposal to increase the VAT is aimed at offsetting revenue loss by the corporate tax cut. However, the tax measures have only a slim chance of being approved by Finance permanent secretary Suparut Kawatkul, because a tax cut or increase is a sensitive issue that this interim government should not touch, said the source. Some possible measures would be more loans from state-owned banks and debt restructuring by specialised financial institutions, said the source. Chalongphob's economic advisers have already suggested some stimulus measures, but officials at the ministry said some of them were not practical. Thus, the ministry needs more input from other state agencies. The office has asked for cooperation from other ministries - Interior, Agriculture, Industry, Labour - and state-owned enterprises. They may have development projects that can channel money directly to low-income groups, said the source. Earlier, Deputy Finance Minister Sommai Phasee conceded that the government had limited options for boosting growth. He said he did not think big tax cuts or hikes were the best option but indicated that some small tax cuts were possible, adding that tax breaks for the real-estate sector could be implemented. Among the several options that Chalongphob's economic advisers have suggested are increasing the hand-outs paid to the elderly poor nationwide and state-owned banks restructuring debts for the poor. The Finance Ministry has tried to maintain growth this year at no less than 4 per cent. The Fiscal Policy Office has projected growth of 4-4.5 per cent, due to weak consumption and private investment. In response, the government will accelerate its public investment in mass transit and logistics.
Wichit Chaitrong The Nation
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