Electricity prices to rise to ฿4 a unit from May as government plans a new series of supports for families in its effort to raise spending power. The fall-off in oil prices has calmed fears about stagflation with the rise of the tax take auguring well for economic prospects once crisis headwinds are lifted.

Thailand’s economic prospects and bottom line both received a boost this week as the price of oil receded by 17% after surging the week before and the tax take from the opening five months of the fiscal year came in with a boost of over 5% or ฿46 billion. Nearly ฿2 billion of this alone came from a new VAT tax levied on foreign advertising platforms within Thailand such as Facebook and Google which generated nearly ฿2 billion for the kingdom with the new VAT charged on 127 foreign corporations yielding a total of ฿3.12 billion.

The permanent secretary at the Ministry of Finance, Krisada Chinavicharana in recent days pledged that any excess government tax takings this year will be applied to alleviate the higher cost of living on Thai people including a rise in electricity prices from May as the country’s tax take for the opening five months of the fiscal year enjoyed a boost of ฿46 billion with nearly ฿2 billion coming on a new tax levied on advertising services linked to the activity of foreign internet giants such as Facebook and Google operating within the kingdom’s borders.

The Thai government’s financial position received a boost in recent days when the Revenue Department reported that tax collection was ahead by ฿46 billion in the five months from September 1st 2021 to the end of January 2022.

It comes in a week which also saw heightened fears over the price of oil and a return to 1970s era stagflation recede when market prices worldwide slid back from $126 a barrel to $105 for West Texas crude (WTI) with trading futures for oil also stabilising at a more benign price with the price of WTI crude for July coming in at $98.25.

Excess tax take to be applied to help people with higher living costs says top Finance Ministry official

Commenting on the boost to the government’s efforts, the permanent secretary at the Ministry of Finance, Krisada Chinavicharana, said that any excess tax taken ahead of projections this year will be used to alleviate the sharp rise in the cost of living for the Thai public.

Oil still boss as Thailand’s economy faces a return to 1970s stagflation over the ongoing Ukraine war

He revealed that the government had collected ฿911 billion in the first five months of the fiscal year producing a ฿46 billion surplus.

The financial budget and projections for the year provide for total government expenditure of ฿3.11 trillion with ฿2.4 trillion projected in revenue as the government seeks to underpin the economy and prospects for a stronger GDP recovery in 2022.

New supports to boost people’s spending power being considered by the cabinet as electricity prices rise

The Thai cabinet meeting on Tuesday 22nd March is reported to be prepared to consider further measures to support the spending power of the public at this time as it has already been confirmed that electricity prices will be rising to ฿4 per unit of electricity from a current ฿3.85.

This will be implemented from May until August due to the spike in world oil prices.

The price will be applied to all electricity account holders including commercial and residential properties.

The hike in electricity prices will also coincide with the end of Phase 4 of the ‘Khon La Khrueng’ subsidy programme for the public where the government pays 50% of the cost of food, drink and general grocery items up to ฿150 per day.

Schemes must end when economy normalises

This week, the top Finance Ministry official declined to speculate on whether a fifth phase of the scheme will be introduced after the end of May.

He said such schemes cannot be maintained on a permanent footing as the economy is now poised to return to normal with most limitations due to the pandemic having already been lifted.

Included in the ฿46 billion windfall for the government is a boost from the new Value Added Tax charge of 7% levied on foreign entities outside Thailand who generate income online within the country.

New Value Added Tax (VAT) on goods and services paid by 127 foreign internet firms boosts state coffers

The new tax stream became effective on September 1st 2021 and has surpassed expectations with a total collection of ฿3.12 billion from 127 foreign firms whose turnover in Thailand exceeds ฿1.8 million per annum.

63% of this income came from online advertising revenue generated by some of the world’s largest social media and online networks which contributed ฿1.96 billion to the government’s bottom line.

Foreign eCommerce platforms generated ฿839 million for the government on a turnover of ฿11.99 billion.

A further ฿282 million was derived from VAT on membership fees for gaming and music services provided by firms outside Thailand on a turnover ฿4.02 billion while ฿12.8 million was derived from accommodation fees and ticket sales on a turnover of ฿183 million.

Well in excess of the ฿5 billion projected

The Director of the Revenue Department, Ekniti Nitithanprapas, told reporters that based on the performance of the new tax in the opening five months, his department felt that the final tax take from the new income source will be between ฿8 billion and ฿10 billion, well ahead of the ฿5 billion projected.

‘Collecting e-service tax from foreign operators or an online platform that provides electronic services to users in Thailand collected more than ฿3 billion in just 5 months, so it is expected that within 1 year the Revenue Department will be able to collect VAT from the service provider platforms overseas, to the order of ฿8 billion to ฿10 billion, which is higher than previously expected to be collected at ฿5 billion’, he explained to journalists when presenting his reports for the opening five months of the fiscal year 2021/2022.

Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here

Further reading:

Oil still boss as Thailand’s economy faces a return to 1970s stagflation over the ongoing Ukraine war

Rights activist’s concern as the trial of Ferrari Joe begins in Bangkok for killing of a drugs suspect

Thailand should move more towards a circular economy as the country faces intractable hurdles

Thailand’s economy awaits the fallout from the Omicron surge as projections for 2022 take a dive

Inflationary fears for Thailand more muted than in the United States but planners should prepare

A cautious recovery in 2022 says Bank of Thailand boss but PM strikes a mildy more optimistic note

With Omicron hovering, firms already suffering a cash flow crunch with the economy again in peril

Shaky economic recovery as planners target only a 1% gain in 2021 with rising headwinds in Quarter 4

Economy climbing out ‘of a hole’, foreign firm’s confidence levels rose sharply during October

Another GDP contraction looms as Thailand tries to boost its economic fortunes by spending more

Government borrows more to bring the economy through an extended Covid 19 crisis with GDP flat

Officials switch to prioritising economic recovery as CCSA expected to agree a new Covid approach

Richest man in Thailand says COVID-19 is like a World War, the kingdom could end up a big loser in the end

Foreigners in Thailand have nearly ฿600 billion in the bank as inequality and poverty rise alarmingly

Rising prospect of GDP contraction for 2021 may see government breach the legal public debt limit

A dead mother beside her children and a taxi driver who slept, show us a nation riven by an extended crisis

Economic fears rising as Thailand faces a bigger crisis than 1997 with rising job losses and debt

Baht falling with confidence in Thailand waning as foreign tourism closure and virus drive funds out

Central bank to lower GDP growth forecast as its attention turns to private sector debt management

Loan bill passes but Thai economic prospects are not bright with a 1.8% 2021 GDP gain predicted

Thailand to reopen to ‘big fish’ tourists as a cryptocurrency friendly haven says promotion agency boss

IMF urges government to loosen nation’s purse strings as finances tighten with the tax take down

Failure to pass the ฿500 billion borrowing decree could lead to the dissolution of parliament

Baht to strengthen later in the year even after July as foreign tourists will return says top bank economist

Industry leaders and central bank all warn that foreign tourism must return to avoid a collapse

Refloat of foreign tourism in the 2nd half of 2021 with vaccines pushed by minister and industry for the sector

Fact – only 6,556 visitors arrived in Thailand last month compared to 3.95 million in December 2019

Desperate foreign tourism business concerns are clinging to straws as they try to survive the crisis

Strict entry criteria to remain as officials await clarity on the medical status of vaccinated people

Challenge of the virus and closure to tourism leads to major long term changes in the Thai economy

Finance Minister says economy must pivot away from tourism with a switch to S-Curve industries

Steady as she goes economy driven by exports and public investment with a 3.3% growth rate forecast for 2021

Thailand’s tourism boss targets thousands instead of millions as public health is prioritised above all

Thailand unlikely to reopen doors to mass-market tourism before the end of 2021 until after a full vaccination

Strengthening baht predicted as investors bet on a reopening of Thailand to mass tourism in 2021

Economic picture continues to darken as cabinet approves new ฿700 billion loan to plug the gap of higher deficits

Thailand facing a credit crunch as 3rd virus wave craters the kingdom’s economic recovery plans

3rd virus wave now spells not just economic loss but financial danger as kingdom’s debt level rises

Still time to avoid lockdown says Health Minister as 3rd virus wave dwarfs all infections to date

Thai economy is still in reverse despite rising confidence and a virus threatening a 3rd wave

Reopening of Phuket still not officially approved although it is the ideal test for a broader move

Minister urged not to be afraid to borrow in 2021 as fears grow for a quick foreign tourism revival

Economy to rebound as the year progresses driven by exports and a return of mass foreign tourism

Door closing on quick foreign tourism return as economic recovery is delayed to the end of 2022

Phuket’s plan to self vaccinate on hold as Interior Ministry orders private sector out of vaccine deals

Refloat of foreign tourism in the 2nd half of 2021 with vaccines pushed by minister and industry for the sector