Thailand
Thailand: VAT refund ‘politically motivated’
The Election Commission (EC) has insisted it needs to examine the law to see if the government’s proposed value-added tax (VAT) refund for next year’s Chinese New Year shopping gives a pro-government party undue political advantage ahead of the next election.
The Finance Ministry said it is looking into implementing the refund programme to provide an economic boost.
However, critics say the programme is politically motivated as the tentative Feb 24 election date is quickly approaching.
They also voiced concerns that the programme is likely to allow the pro-regime Palang Pracharath Party (PPRP) to capitalise on the popularity of the refund and gain an unfair advantage over rival parties at the poll.
EC secretary-general Jarungvith Phumma said the commission would take a look at the law to see if claims of an unfair advantage have substance.
The Finance Ministry plans to offer VAT refunds to shoppers who spend up to 20,000 baht from Feb 1 to 15 next year to boost domestic spending amid murky economic prospects.
With a 20,000-baht maximum and a 5% VAT refund, shoppers will be eligible for a 1,000 baht return, according to Finance Minister Apisak Tantivorawong.
Only spending on debit cards with savings accounts linked to PromptPay will qualify for the VAT refund.
The shopping tax break is expected to cost the government 6-7 billion baht in forgone revenue, Mr Apisak said.
The VAT refund period coincides with Chinese New Year, which falls on Feb 5, 2019.
Thailand has a 7% VAT on domestic purchases of goods and services.
The Finance Ministry’s latest tax break idea comes amid criticism that the government’s recent 86.9-billion-baht splurge on low-income earners, the elderly and retirees represents pork-barrel policymaking as next year’s general election approaches.
Mr Apisak, however, insisted the 5% VAT refund is not intended for wooing votes for the pro-regime political camp, saying the tax rebate programme was conceived before the “Shop Chuay Chat” tax break programme was introduced in 2015.
When the proposed 5% VAT refund programme was first floated, the country’s consumption rate had slumped.
Although consumption has picked up since the refund was introduced, certain types of consumer products still need a sales boost, he said.
Mr Apisak said he hopes the VAT refund scheme will encourage more spending and help the country maintain its economic growth at 4% or above next year.
In the event that the economy expands by less than 4%, an enormous effort would be required to raise the figure to 4%, he said.
Unlike past years, next year’s tax break programme will apply to specific goods such as tyres, books (both hard copies and e-books) and One Tambon One Product items, said Ekniti Nitithanpraphat, director-general of the Revenue Department.
Yutthaphon Isarachai, a political science lecturer with Sukhothai Thammathirat Open University, advised the government to be cautious about what measures it implements ahead of the poll in order to avoid breaking any election laws.
In the event that the PPRP wins enough MP seats to lead the formation of the next coalition government, the new government may face a political crisis due to a lack of public trust, he said.
Source: https://www.bangkokpost.com/business/news/1585898/vat-refund-politically-motivated