Taxes Will Not Increase Says Thai Finance Minister

by Mary Swire, Tax-News.com, Hong Kong

28 March 2003

Taxes will not be raised in Thailand for the next few years according to the country's Finance Minister Suchart Jaovisidha. And the minister will only consider raising VAT to 10% (presently 7%) after the economy has shown signs of substantial growth, he told an audience at the Thai-Japanese Association lunch.

Instead, in order to raise revenues, the minister plans to widen the scope of the tax base, paying particular attention to the so-called 'underground' economy.

The minister also revealed that an agreement was close on the planned reductions in import tariffs which should benefit both manufacturers and consumers.

The government was still committed to privatisation of nationalised industries, Suchart told the gathering, though he stressed that the pace of the privatisation programme would be dictated by economic conditions.

Nevertheless, The Finance Minister appeared to be upbeat about the economy's prospects, and hoped that the measures being put in place would encourage interaction between local and international markets and raise the value-added content of exports. He also expects the reforms to impress the credit rating agencies, and suggested that Moody's is likely to increase the country's rating in the next couple of months.

Economic growth was a very healthy 5.3% last year, above average for the region, though the deputy Prime Minister for economic policy, Somkid Jatusripitak has warned against complacency, suggesting that more must be done to improve Thailand's competitiveness in the coming years. Consequently, the government has set aside 22.5 billion Baht ($500 million) for competitiveness programmes in its 1.02 trillion baht ($23.8 billion) budget for 2004. Another 20 billion baht ($467 million) has been put aside as a contingency fund should the country suffer from any extreme volatility in international markets.

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