Thailand approves shopping tax break to spur year-end consumer spending

Originally aired on Channel NewsAsia on November 9, 2017

The Thai military government has approved a tax break incentive just in time for the holiday shopping season, where people can claim taxes back as much as $450. But while Thailand’s economy is slowly recovering, not everyone will profit from this scheme.

TRANSCRIPT

Christmas comes early in shopping malls, and while this special day is not originally part of Thai tradition, one aspect certainly has been adopted quickly here: the year-end shopping spree.

For the third year in a row, Thailand’s military government is introducing a shopping tax break just in time for the holiday season.

Dubbed "Shop to Help the Nation", it is a bid to boost the nation’s economy before the end of the year.

SAKSITH SAIYASOMBUT; Bangkok, Thailand:
"This is not the first time the military government has introduced such a measure, but never this early in the holiday shopping season.  The tax-break incentive usually starts mid-December but this year, it’s starting this Saturday, and it’s only November.

So how does it work? Well, basically during this period, you can go shopping for many things, almost anywhere, and simply file a tax refund claim later. Depending on how much you buy, you’ll be able to get a deduction of up to 15,000 Baht or about 450 US dollars in taxes.

But since you need the receipts to claim for this, shopping in traditional markets, or any place that doesn’t issue receipts, is off-limits. Also, the claims process can be fairly tedious, and the additional paperwork you have to go through might be enough to scare some people off from even taking part. The other thing that might be a deterrent is that there's no tax break for items such as alcohol, tobacco, vehicles, and fuel."

Thailand’s economy may be slowly growing again - with an expected GDP of up to 4 per cent for this year, mostly bolstered by tourism -  but public consumption and consumer confidence is still relatively low. 

So, to get people spending, the government's taken to giving tax breaks on shopping, but experts say the policy is losing steam.

AMONTHEP CHAWLA; Senior Vice President, CIMB Thai Bank Public Company Limited:
"We see effectiveness of the policy has been diminishing. Because people tend to delay their consumption until the end of the year."

Another problem is that not everyone is benefiting from this.

AMONTHEP CHAWLA; Senior Vice President, CIMB Thai Bank Public Company Limited:
"Those who would benefit from this tax break would be middle class, this who pay taxes - which are not that much in Thailand, there are only 3-4 million people. But those who really need this programme would be a lot more: 20 million people in the labour force who are in the informal sector, in the SMEs, in the agriculture sector - and they don’t have the policies to stimulate their purchasing power to stimulate their income. So the point is, we would rather see pro-income distribution rather than a pro-growth policy."

The government estimates this year's tax break will cost it 60 million US dollars, and although it expects consumer spending to the tune of 300 million dollars, it's going to take more than a year-end shopping spree to help the economy.

Saksith Saiyasombut, Channel NewsAsia, Bangkok