Little overall impact seen in tourism tax break 

The Cabinet yesterday gave the green light to the tax deduction for tourism expenditures while the similar measure for shopping has not been reviewed yet.
Kobsak Pootrakool, vice minister at the Prime Minister’s Office, said the measure for tourism promotion and recovery was aimed at stimulating the general economy.
The measure proposed by Finance Ministry will waive personal income taxes for actual costs of up to Bt15,000 incurred by Thais for buying services provided by tourism business operators and hotels for domestic trips from December 1-31. 
This new travel incentive in addition to the tax break for Bt15,000 in spending on domestic travel from January 1- December 31, said Nattaporn Jatusripitak, an adviser to the commerce minister. 
These two measures would allow a combined deduction of up to Bt30,000 for the festive month.
The Finance Ministry estimates this measure to reduce tax revenue by Bt150 million, but it will increase the circulation of money, which will spill over into the overall economy.
Veerathai Santiprabhob, governor of the Bank of Thailand, said the government may have seen disadvantages in letting the economy weaken and brought out the temporary measures to maintain growth momentum pending the mega projects coming on stream in 2017.
However, if these measures are employed for too long, the effect on the economy would fade, as future demand is being used up, he said.
Kobsak said the “shopping for the nation” measure has not yet been considered, but would definitely be taken up in the Cabinet meeting in the next periods.
Supawan Thanomkiat-phum, president of the Thai Hotels Association, said the extended tax scheme would help buoy the hotel and tou|rism business in the coming year. 
The measure is also expected to encourage many people to take a vacation or spend money out of home because they can use receipts for income-tax deductions. 
However, the scheme would not give a gigantic jolt to the tourism industry like the first endorsement years ago when the country faced a crisis, he said.

“If this measure is fully endorsed, that means a lot of people will join it. 
“Everyone involved in the hospitality industry including hotels, resorts, travel companies, shops and restaurants will benefit from it. That will be good for the economy,” he said.
The association, however, expressed concern over the flagging of the consumption index in the past months, |saying this initiative will at |least help drive the economy forward, not level or bac|kward.
“With this measure, many hotels and restaurants will gain business for a short while during the year-end season,” Supawan said.
Pimonwan Mahujchariya-wong, deputy managing director of Kasikorn Research Centre, said spending on domestic tourism during Songkran reached Bt2 billion, so spending on tourism in December should pass Bt2 billion based on the number of days. 
However, the additional tax deduction of Bt15,000 for only one month might not produce much spending because December is the high season of tourism.
Merrymakers have to plan their trip in advance, including booking hotels and tour packages, so new travellers who want to get the tax deduction might run into a limited supply of rooms and tours.
Tourism accounts for 10 per cent of GDP.
KResearch believes the tax deduction for travel could spur domestic spending but wants to see the tax deduction for shopping, which is expected to be proposed to the Cabinet next Tuesday, since that will give a bigger boost to domestic spending.