11-month tax revenue down 1.1 per cent

Thailand is set to run another large budget deficit this year as tax revenue declined by a further 1.1 per cent to Bt1.858 trillion in the first 11 months of fiscal year 2012 over the same period last year, the Finance Ministry’s Fiscal Policy Office (FPO) reported yesterday. 

Net tax collection in August was Bt300 billion, 9.7 per cent lower than the ministry’s projection. 

The lower revenue was attributed to the devastating floods last year, the effects of the European debt crisis and the continued low excise tax on diesel fuel. 

The ministry targets revenue of Bt1.9 trillion and a budget deficit of Bt400 billion for the full fiscal year. 

Somchai Sujjapongse, director-general of the FPO, said yesterday that many factors had shrunk the government’s revenue. Among these were the flood crisis last year, uncertainty over the global economy, the cut in the corporate tax rate, a delay in the increase of the excise tax on diesel, and government tax measures to alleviate the rising cost of living and increase people’s purchasing power. 

However, the ministry is still confident that revenue this year will come close to the projected amount, Somchai said.

In August alone, corporate-tax collection fell Bt37.48 billion – or 18.1 per cent – year on year, because of the scrapping of the midyear corporate-tax payment as an assistance measure to flood-hit firms. 

Additional factors were the damage to the country’s exports caused by the global economic downturn, the granting of additional investment privileges to “green” businesses, an increase of bank reserves and the postponement of the diesel-tax increase to 0.005 baht, which caused revenue loss of Bt8.242 billion. 

On the positive side, Somchai, who is also Finance Ministry spokesman, said the recovery of the auto industry and the government’s first-car scheme had boosted tax collection from new-car sales by Bt5.466 billion – 61.8 per cent more than forecast. 

Moreover, increased consumption and imports increased collection of value-added tax by 2 per cent, or Bt1.15 billion, and import tariffs by 10.2 per cent or Bt915 million over the projection. Transfers from state enterprises were also higher than the targeted Bt654 million. 

All of these factors affected the revenue receipts during the first 11 months of fiscal 2012, Somchai said.