The Revenue Department has proposed the Finance Ministry to extend the 7 percent value-added tax (VAT) and 20 percent corporate tax for another year in order to ease burden on consumers and corporations due to the current economic slowdown.
Mr Sutthichai Sangkhamanee, director-general of Revenue Department, said the last two-year extension of the two types of taxes, formerly rated at 10 percent and 23 percent, was due to expire on this September 30 and another extension has to be done now because it needs the approval of both the cabinet and the Election Commission.
The EC, he explained, will determine whether the tax cut extension will be deemed as breach of Article 181 of the Constitution or not.
Mr Sutthichai said normally each extension would last two years but, this time, it would last just one year because this government would not place the new government into a commitment for too long.
He believes that the EC will have objection to the Revenue Department’s proposal because if the VAT is to be charged at 10 percent like before many consumers will be affected as the prices off every consumer products will increase accordingly.
Mr Suthichai said that the Fiscal Economics Office had suggested that the old 10 percent VAT rate be reintroduced as every one percent increase would generate 70-80 billion baht in revenue annually for the state. But he thinks that increasing VAT for the time being is untimely with the depressed economic situation.
Revenue collection for the first five months of the 2014 fiscal year amounted to 802,000 million baht representing a 0.6 percent drop or 4,679 million baht short of the target.