View, Government's, Economic, Stimulus, Package

UPDATE: See changes below

Bangkok Post on what is being offered:

Under the package, people who earn less than 150,000 baht per year will not have to pay income tax. The present household tax exemption ceiling is 100,000 baht per year.

The package also increases deductions for life insurance premiums and investment in long-term mutual funds , along with retirement mutual funds .

It includes cutting the corporate tax rate for listed companies to 25% from 30% for three years in a bid to stimulate the sluggish economy.

The package also exempts small- and mid-sized firms earning less than 1.2 million baht a year from paying income tax over the next three years.

Corporate income tax is waived for those firms making net profits of less than 150,000 baht.

To help small- and medium-sized firms, corporate income tax is cut for newly-listed companies in the Market for Alternative Investment to 20% from 30% for three accounting years. The tax for MAI-listed firms is reduced to 20% from 30% for the first 20 million baht in net profit for three accounting years.

To boost corporate competitiveness, companies will get tax deductions for energy-saving machinery, equipment and installation at 1.25 times the cost.

Company tax deductions for depreciation of machinery and equipment related to productions and services are allowed to be as high as 40% of costs on the delivery date.

They can also gain tax deductions for depreciation of computer programs for three years.

The changes to personal income tax are best illustrated (UPDATE: Actually, they seem to have left out the personal income tax allowance - see here) in this graphic from the Post:


The Nation:

Nonetheless, after unveiling of a tax package to revitalise the economy on Tuesday, it received only a lukewarm response.
...
Businessmen and consumers have taken virtually no notice of the tax package. Consumers don't see how this will improve their purchasing power, while businessmen anticipate no significant growth on the demand side.

Bangkok Post:

Paiboon Nalintarangkul, executive chairman of Tisco Securities Plc, said the economic stimulus scheme issued on Tuesday, if implemented efficiently, would benefit the Thai economy

Wall Street Journal:

The end of capital controls in Thailand could help make the country’s stock market one of Asia’s better performers in 2008, some equity analysts suggest.

An early indication of Thailand’s potential appeal came yesterday, when the benchmark Stock Exchange of Thailand Index fell 0.3% to 842.92 while other leading Asian markets swallowed substantial losses following Wall Street’s battering last week.

Henderson's Far East $550 million is now buying Thai stocks after the removal of capital controls and a fiscal stimulus policy.

The Nation in an editorial:

Investing in education and providing money and equipment to improve human resources takes time and requires patience. We can see that the Samak government, like the Thaksin government, is more interested in implementing populist programmes or stimulus packages that offer results in the short term, rather than undertaking education or human resources programmes that strengthen the knowledge foundation of the country for the longer term.

The latest tax-cut package is a case in point. The Samak government aims to hand out tax benefits to low-income earners and also to the middle class, including property firms, in order to help stimulate consumption and economic growth. This package, which will take effect next year, will result in a loss of tax revenue for the government of around Bt43 billion.

COMMENT: But don't tax cuts give those with lower incomes the opportunity to improve their educational qualifications? (UPDATE: Thanks to Thai Crisis for pointing out that the Post's figures are off so As Bangkok Post's graphic shows a person earning 9,000 baht a month annual tax drops from 9,900 baht to zero. Instead of a tax home pay package of around 8,200, they will be getting 9,000 baht.* This is a fairly high percentage for those people. The main beneficiaries percentage wise is those in the 9,000-30,000 baht a month range - everyone earning over about 9,000 12,000 baht a month income basically pays 10,000 baht less tax per year.

btw, if we were to remove the 60 billion baht military budget increase, we could pay for the stimulus package and still have move left over.

*Actually, there will be some some deductions, but they will still get more than 800 baht a month extra.