Cabinet approves tax deduction for Songkran expenses

The Cabinet also agreed to extend the tax deduction for hotel accommodation until the end of this year after the measure expired on December 31, 2015. That deduction also has a Bt15,000 maximum per person.
“Those who spend on hotels during the Songkran Festival will be eligible for two types of tax deduction, including the tax measure for the festival itself and that for tourism. Therefore, the maximum tax deduction will be Bt30,000 per person for the whole year. This is not expected to have much impact on the government’s revenue,” said Finance Minister Apisak Tantivorawong.
The Tourism and Sports Ministry forecasts a 20-per-cent increase in the number of tourists to 2.6 million during the April 9-17 period, putting an estimated Bt15 billion into circulation. Of the total number of tourists projected, 2.1 million are expected to be Thais and the rest foreigners.
Somchai Jitsuchon, research director of inclusive development at the Thailand Development Research Institute, said the third series of stimulus measures that would be presented to the Cabinet were on the right track and could not be called populism.
The measures may be able to start during this period when the economy is sluggish with export slowdown and more-than-expected droughts, he said.
A subsidy programme that will pay each low-level civil servant and other low-income earners Bt1,000 will pour approximately Bt10 billion into the economic system, he said.
Somchai does not expect the tax deduction for spending on food and hotels during the Songkran Festival to have much impact on the economic system. However, psychologically, the move could boost tourism and spending.
The third-series stimulus is projected to raise gross domestic product by 0.1-0.2 per cent. Combined with the Baan Pracha Rath Project, this year’s GDP could be expanded by an additional 0.2-0.4 per cent.
The measures are expected to reduce damage that may arise from droughts by Bt60 billion to Bt100 billion or 0.5 per cent of GDP.
If these stimulus measures can sustain the economy, the government may not need to launch more, Somchai said, but more measures may follow if the droughts are more severe and exports shrink.
The relief measures for low-income earners and farmers were not included for consideration in the Cabinet meeting yesterday, but Apisak insisted that the plan would go ahead as scheduled.
Apisak said after a meeting of a committee to drive the economic stimulus measures and investment that Transport Minister Arkhom Termpittayapaisith had vowed to go ahead with 20 infrastructure projects this year. The total investment would be reduced to Bt1.5 trillion from Bt1.79 trillion after shortening the distance of the high-speed-rail, which will now run from Bangkok to Nakhon Ratchasima only instead of going all the way to Nong Khai.
Of the 20 infrastructure projects, eight will be go ahead as planned and the remaining 12 will be delayed by two to three months.