IMF backs Thai tax, restructuring of energy prices

The IMF nod came during a discussion between its representative Louise Bieber and Thai Deputy Prime Minister MR Pridiyathorn Devakula yesterday.

According to Pridiyathorn, the IMF supported the country’s recent restructuring of fuel prices and excise taxes for fuel as steps in the right direction.

It was also similar to the restructuring of other taxes, including the introduction of an inheritance tax and a land and building tax.

In response to the IMF’s official’s query about the direction of value-added tax, Pridiyathorn said Thailand might need to watch the VAT situation a bit longer.

“I explained Thailand’s situation and we agreed on it. There’s not sufficient tax revenue for investment. An increase in taxes may be needed. Last year, government expenditure on investment accounted for only 17.5 per cent of the total budget, and that’s too low. This year, it has risen to 20 per cent. But it has to go up to 25 or 30 per cent finally. The IMF also has asked us to accelerate investment,” he said.

In response to a question on the European Central Bank’s recently announced quantitative easing programme, Pridiyathorn said the Bank of Thailand was monitoring the situation closely. At a meeting yesterday of the economic, monetary and fiscal committee of the National Legislative Assembly, Pridiyathorn said that while the Thai economy had slowed last year, major economies including the United States, Japan and Europe had still not recovered.

Thailand is also expanding its manufacturing bases and promoting investment into higher technology, he said at the meeting. More energy exploration has been done, while power plants fuelled by new types of energy have been built. More rubber production has also been promoted.

More projects related to natural resources have been added. Licences to mine potash or rock salt have been granted in Chaiyaphum, Udon Thani and Nakhon Ratchasima.