Tax break on goods needed to fuel economy, says BOT chief
THE GOVERNMENT hopes a proposed move to spark a shopping spree by offering tax breaks on goods at the end of the year will continue the momentum achieved by economic stimulus activities in the fourth quarter, said Bank of Thailand Governor Veerathai Santiprabhob.
Veerathai said the tax breaks would be a smart short-term stimulus measure before major government projects were launched next year.
The Finance Ministry’s tax break proposal is expected to be considered by the Cabinet today.
The ministry wants the tax break to be increased to items of up to Bt30,000 after there was a Bt15,000 cap for the scheme last year.
Veerathai said temporary factors affecting economic activities were lower agricultural prices, mainly rice, the crackdown on zero-dollar tours resulting in the decline in Chinese tourists and the mourning period for His Majesty the King.
The government needs a short- term stimulus measure to fuel |economic growth in the fourth quarter, he said.
The tax breaks should be a short- term tool because boosting spending will impact on future domestic demand, he said.
There is also a remedial measure to spur economic growth, with the government handing out Bt12.5 billion to the poor, or between Bt1,500 and Bt3,000 each person.
However, Veerathai said a long-term measure relating to investments should also be considered because it would increase the efficiency of the agricultural sector.
The BOT this year projected the country’s gross domestic product would be 3.2 per cent and the country’s economy next year should grow further.
The central bank has no plan to adjust that figure just yet as it wants to see what happens with economic activities in the fourth quarter.
Currency volatility is being monitored, he said, with capital flows predicted to move to the US due to the policies of president-elect Donald Trump. He added that foreign currency management was an essential skill for traders.
Veerathai said that looking ahead, the geopolitical environment was a critical factor impacting on goods prices and currency exchanges in the region.