Spending plans insufficient amid floods crisis: Abhisit

Economy November 10, 2011 00:00

By Wichit Chaitrong
The Nation

6,820 Viewed

The government's spending plans fail to meet the challenges presented by the floods crisis, the opposition said yesterday during the debate on the 2012 Budget Bill.

Prime Minister Yingluck Shinawatra presented planned annual expenditure of Bt2.38 trillion for the 2012 fiscal year, 9.7 per cent higher than for the previous fiscal year, which ended on September 30.

The government expects to collect revenue worth Bt1.98 trillion, resulting in a budget deficit of Bt400 billion, which is equivalent to 3.4 per cent of gross domestic product.

The administration plans to spend Bt120 billion for flood recovery and flood prevention, while local government will spend another Bt10 billion, resulting in total expenditure of Bt130 billion in this area, she said.

Opposition Leader Abhisit Vejjajiva told Parliament that the government spending plan was insufficient to meet the challenges of the current situation, under which revenue is expected to decline and a large number of people are suffering from the devastating floods.

He said the central government’s Bt120billion budget allocated for flood recovery and flood prevention would not be adequate due to the large number of flood victims and the huge investment required to prevent future flooding.

Abhisit also expressed concern over the lack of transparency surrounding the Bt120 billion. He said that because it was earmarked as central budget under the supervision of the prime minister, project details were not available.

“It should be allocated to ministries, which have to present clear projects for spending,” said Abhisit.

He also predicted that the government would not meet its revenue target, arguing that it was based on an assumption of economic growth of 3.5 to 4 per cent this year, whereas the Bank of Thailand last month downgraded its growth forecast to just 2.6 per cent due largely to the floods crisis and uncertainty over the global economy.

Moreover, the government’s plan to cut corporate income tax from 30 per cent to 23 per cent next year will result in a revenue loss of Bt55 billion for the year, he said.

The oil-subsidy policy will also lead to lower tax revenue, since the government currently borrows Bt10 billion via the Oil Fund, he added.

Abhisit argued that lower revenue could lead to the government stepping up a tax-collection campaign, which would hurt small and medium-sized enterprises.

He said he expected the government to run a larger deficit, with the increased budget-deficit burden shifting to the 2013 fiscal year.

He urged the government to review tax policy by giving a tax break to selected firms that had agreed to keep their employees on during the floods crisis. Alternatively, breaks could be given to firms affected by the flooding, he suggested.

Abhisit asked the government to drop its first-car scheme, under which tax refunds of up to Bt100,000 are available for each car buyer, due to the overall tax cost of the measure being estimated at Bt30 billion.

“The government should use the Bt30 billion to create jobs for unemployed workers,” he said.

The opposition leader also blamed the government for implementing the farm-subsidy scheme, which Yingluck said would cost Bt92.36 billion.

“As the government plans to buy 25 million tonnes of rice at Bt5,000 per tonne higher than the market price, it would cost taxpayers Bt125 billion,” he claimed.

Abhisit also urged the government to cancel tax breaks and soft loans to first-time homebuyers and to drop the plan to provide tablet computers for students, as neither scheme was urgent.

He disagreed with the government plan to cut spending for the universal health scheme by about Bt7 billion, which he said would lead to Bt140 less spending per head each year than the budget previously prepared by his own administration.

Nor did he agree with the government’s planned cut in student-loan funding from Bt18 billion to Bt11 billion.

He said he did, however, agree with the plan to raise the minimum wage to Bt300 per day, and the minimum monthly income for state officials with a bachelor’s degree to Bt15,000.

The Budget Bill is being considered later than the original schedule, which was for implementation in October, due to the early general election held in July and the need to revisit the Abhisit government’s spending plans.

His Democrat-led administration had prepared a budget aimed at running a deficit of Bt350 billion, with a revenue projection of Bt1.9 trillion against a spending plan of Bt2.25 trillion.

The new Pheu Thai-government changed the spending plan to meet its populist policies and the challenges presented by the emerging flooding crisis.

Suchart Thadathamrongvech, a Pheu Thai MP, yesterday defended the government’s budget, arguing that it needed to spend more at a time of global economic weakness and the flood crisis.