VAT may be increased 1-2%

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Finance Minister Sommai Phasee indicated that value-added tax (VAT) might  be raised by 1-2 percentage points next year to finance the government's 2015' fiscal budget.

He said it has to be increased by at least a percentage point, maybe even two points, but there’ll be further discussion about this.

Sommai’s indication came as the National Council for Peace and Order has earlier approved an extension of the 7% rate for another fiscal year, to Sept 30, 2015, with the aim of smoothing domestic consumption, which has faltered since the second half of last year.

The  proposed 1-2% VAT increase will be next on the agenda after the inheritance and land and buildings taxes have won National Legislative Assembly approval.

Mr Sommai said revenue collection was expected to meet the target of 2.325 trillion baht for this fiscal year started Oct 1, while revenue collection in 2016 was projected to be even higher due to tax reform measures, particularly the land and buildings tax as well as VAT.

Tax revenue collection in 2016 was expected to increase reasonably, and this would contribute to an increase in government spending, which would be higher than this year’s expenditure, he said.

The Finance Ministry will deliberate its fiscal-2016 budget in mid-January, and the size of state expenditure is expected to be 12-13% higher.

Mr Sommai said that the government would use this budget to develop the economy, social security programmes, education and healthcare services.

The fiscal-2016 budget is projected at 2.88 trillion baht, up by some 300 billion baht from the sum of 2.575 trillion baht for the fiscal-2015 budget, he added.