BANGKOK, 8 August 2012 – The Fiscal Policy Office (FPO) is confident that the Cabinet’s decision to maintain the current VAT rate for 2 more years will help boost the local economy considerably.
FPO Director-General Somchai Sujjapongse said on Tuesday that the Cabinet’s latest resolution to postpone the increase of VAT rate from 7 percent to 9 percent until late 2014 is in line with uncertainties caused by the global economic turmoil.
Mr. Somchai stated that, under current circumstances, the Thai economy is to rely more on domestic consumption and investment in order to expand satisfactorily.
He said that an increase in VAT in October of this year will affect consumption and investment in Thailand considerably while the pitfall from the delayed VAT increase will highly likely offset the decrease in Thai exports, caused by the Eurozone debt crisis.
The FPO chief went on to say that the postponement of the VAT increase should not affect consumer spending because the state investment in infrastructure will help boost the people’s income, which will accordingly prepare all to be ready for a higher VAT rate.
However, he warns the country to continue monitoring both local and overseas risks during the next 2 years, especially the recovery of the European economy.
Regarding the state revenue collection, Mr. Somchai said that this year’s target was set at 1.98 trillion baht.