Call to increase VAT to fund govt projects

The Nation (15 November 2007)

Value-added tax (VAT) should be increased by one percentage point to help fund social welfare and infrastructure projects, Deputy Prime Minister Sommai Phasee said yesterday.

If the government formed after the December 23 election wants to push mass transit, social programmes and other capital developments, it has to find more tax revenue, he said. Tax collections usually go up 8-9 per cent a year but need to be speeded up to at least 10-15 per cent, he said.

Increasing the VAT by one point would generate tax receipts of Bt30 billion, but the interim government will not raise the VAT from its current rate of 7 per cent, he said.

Raising taxes was not a popular policy since it could squeeze voters, he admitted.

The Fiscal Policy Office has prepared a new tax package and will propose to the new finance minister what types of new taxes should be introduced, he added.

Separately, a source said the Finance Ministry has approved a proposal of the board of Secondary Mortgage Corp to appoint Duangphorn Arpasil, a former deputy managing director of ACL Bank, to head the organisation, which has been plagued with corruption and high non-performing loans.