Tax incentives might boost holiday spending, but the government has to be more far-sighted
The one positive about measures introduced to stimulate the economy is that they’re usually better than nothing. And that’s the case with the latest “Shop for the Nation” push just announced, a concept that stands to become a year-end trademark of the Prayut administration. The idea is to offer consumers tax incentives to spend more during the holiday season to bolster the national economy. But while it does recharge some sectors, it doesn’t have to be a perennial routine.
After all, most people do spend more during the festive period without the need for prodding.
The government expects that the tax incentives will entice car owners to buy a new set of tyres and families to invest in a new TV set. They might not actually need such things, but if the receipts from their purchases can be filed along with their tax forms to earn deductions, people might well be more tempted to get out and shop. It’s a reasonable assumption, though it raises the question of who benefits the most – shopper or salesman.
Also to be considered when it comes to such tax measures is that they ought to be long-term rather than short, and should be tied to pressing national issues – like labour, education and the need to prepare for an ageing society.
The government, for example, might consider doubling the tax privileges parents enjoy to aid with the high cost of raising and schooling children. From diapers and food to school uniforms and tuition, parenting is never cheap. Heftier tax breaks for them might ensure they have savings for the future, and in the interim this too would benefit manufacturers and retailers.
Investing in our children is an investment in the future, it’s said, but – despite the steady drone of political rhetoric – state funding has never reflected how important this social need is. Economic-stimulation packages have been directed mainly at adult individuals and little attention has been paid to schooling or skill development.
Giving parents better tax incentives to cover their child-rearing outlay of course yields far less significant results than doing the same for the tourism sector, to name one example. But it’s the well-raised child who will do more for the country in the future. With Thailand fast becoming an ageing society and skilled labour in decline, doubling tax incentives for parents would kill several birds with one stone.
Deputy Prime Minister Somkid Jatusripitak has meanwhile instructed the Fiscal Policy Office to consider greater tax incentives as an additional measure to underwrite the employment of senior citizen. He sees the move as countering the labour shortage stemming from Thailand’s worryingly low birth rate.
So, while the Prayut government’s revival of festive-season tax cuts is “better than nothing”, it threatens to foster an annual habit among citizens of purchasing goods they don’t actually need. The worst-case scenario would see millions of people waiting until year’s end to buy what they’ve needed all year. Why change your tyres in June when you can do it more cheaply in December?
Tax programmes that would benefit parents, children and seniors will never generate the enthusiasm (or publicity) that the government’s “Christmas bonus” does, but it should be obvious to all which approach would help Thailand more in the long run.