ASEAN KEY DESTINATIONS
Thai business against investment tax breaks
Santi Vilassakdanont, honorary chairman of the Federation of Thai Industries (FTI), said that since the proposals were not yet clear, the government should closely look at the structure. Of particular concern, he said, was a suggestion that the Board of Investment scrap tax holidays for approved investors, while the government would not increase value-added taxes (VAT).
"I disagree [with the proposal]. VAT and BoI privileges are two different issues, and investment policy should include tax privileges in order to promote investment, as it also reflects the image of the country," said Mr. Santi. "However, if [the government] is confident that [the measures] will not affect investment, then go ahead with it."
Sathit Rungkasiri, director-general of the Revenue Department, floated the radical ideas at a seminar on Wednesday. He said the corporate tax rate could be cut to 18 percent from 30 percent now if BoI tax holidays were ended, and the government would not lose revenue.
Mr. Satit said the proposal could create a fairer tax structure for all businesses. He also floated the idea of a 25 percent cap on personal income tax rates, which currently range from 5-37 percent.
The current VAT rate is 7 percent and successive governments have decided against increasing the rate to 10 percent, as they had been empowered to do, ever since the 1997-98 economic crisis. Mr. Santi said the government should realise that VAT is not a burden for low-income consumers. "Luxury goods, for instance, could be taxed at a higher rate while taxes for consumer goods should be kept at the same rate," he said.
Cutting promotional tax privileges could be considered for certain sectors, such as those harmful to environment, but not across the board, he added.
FTI vice-chairman Thanit Sorat also said that VAT, personal income tax and BoI tax privileges were all different issues and not related to one another.
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