Now not the time for VAT hike: business owners
Business owners have reacted negatively to news of a possible increase in the value-added tax from 7 per cent to 10 per cent by the beginning of next year.
Dr Chatchai Tuangrattana-pan, director of the Thai Retailers Association, said such a policy would lead to inflation. The impact would be felt most keenly by low-income earners, he said, as higher prices push up their living costs.
Suvit Thongrompo, managing director of SF Cinema City, said businesses would pass on the burden of any tax hike to consumers.
“Consumers are already burdened by a high cost of living. They also face many difficulties due to the serious flooding and the [fears of another] global recession. The government should not be adding to their burdens,” Suvit said. He added that while it was SF Cinema City’s plan to keep ticket prices frozen for as long as possible, it would have no choice but to raise them if the government increases the VAT next year.
Boonchai Chokwatana, chairman of Saha Pathanapibul, said the magnitude of the impact of any VAT hike would depend of how far it is raised.
“We expect that the impact will be acceptable if the government increases the VAT no higher than 10 per cent. However, the impact will be severe if the VAT is raised significantly – to 14 per cent, for instance,” he said.
Boonchai said the VAT increase would have a direct impact on consumers’ spending power, producing a “domino effect” as businesses’ sales volumes shrank.
“From my point of view, the government should help people raise their spending power via such policies as increasing the minimum wage. They should wait for the economy to improve before they raise any taxes, including the VAT.”
On a different topic, SF Cinema City’s Suvit said the possibility of a return to economic recession in the United States could actually be good news for the local film industry in Thailand.
“The cinema industry does not rely [solely] on economic conditions, but also on the quality of films. In times of economic recession, Hollywood focuses on producing good-quality films and exporting them to other markets around the world. Hollywood is a major industry, which creates a lot of money for the US itself,” he said.
