Thaiwonderland : free water, electricity, buses, trains and tax free diesel… for 6 months

The sinking Samak government has decided a… rescue package, to help low income households and… businesses.

-The government will pay water bills for low-income households that consume fewer than 50 m3 liters each month.

-It will do likewise for households that consume fewer than 80 units of electricity a month. For those using up to 150 units a month, the government will pay half.

-The government decided not to remove subsidies on household cooking gas. It says prices will remain at today’s level.

-free public transport on non air-conditioned buses. In all, the poor can ride about 800 buses plying the capital’s streets for free.
The state will reimburse the bus companies. It expects the Bangkok Mass Transit Authority to shoulder losses of Bt1.4 billion.

-Third-class train seats to all destinations will be paid for by the state.

And last but not least… massive diesel subsidy.

-The excise taxes for gasohol and other biofuels will be cut by Bt3.30 per litre to almost zero. The tax for diesel, which is widely used in the transport sector, will also be cut by Bt2.30 per litre. The tax for biodiesel will also see a similar cut. (source Nation, Bangkok Post)

Total cost of this new thai folie : around 47 billions THB for 6 months.

9,5 millions of low income households will benefit from thoses decisions. But, that’s not really the point.

On the 47 billions THB, the bulk will be spent on the tax free diesel (biofuels are for the moment virtual in term of use).

In a time when most asian countries like Indonesia, Malaysia and even China reduce their subsidies on fuels… Thailand increase them !

The whole plan is a pure economic non sense. Because, eventually, someone will pay for all those gifts ! There isn’t any free lunch.

And for what purposes ? What will happen in 6 months ? Oh yes, I forgot : oil will cost 20 USD per barrel, Thailand will enjoy a growth of 15 % per year, and every thai (children too) will win one time the lottery… 😉

The move is pathetically obvious : gain votes for the next… general elections, after a House dissolution and a charter rewrite.

That’s the plan of Samak. The last one.

14 Responses to “Thaiwonderland : free water, electricity, buses, trains and tax free diesel… for 6 months”

  1. 1 chinesethai 16 July 2008 at 3:25 am

    Vote-buying and election fraud are ugly enough. Spending taxpayers’ money in the interest of oneself who has insider info of when to dissolve the parliament is more disgusting than vote-buying.

    Cheating and abusing the law may have seeped into Thai people’s bloodline.

  2. 2 Marvo 16 July 2008 at 3:37 am

    I am agog at the blatancy of Samak and his “government”. Is there really such a national lack of recognition of, and complacency at, what is going on here (PAD aside) or are people “bought” so cheaply? Very sad.

  3. 3 ThaiCrisis 16 July 2008 at 3:48 am

    It’s regular thai politics… but pushed to its maximum. 😉

    It’s an act of desperation, nothing less.

    And it’s proof that the political situation is going to become explosive in the coming months…

    Again and again, the government is sinking, for many different reasons. The only lifeboat is a charter amendement, a house dissolution and a snap elections.

    For the PPP it’s the only way to go.

    The opposition can’t let that happen… because they know that they would be -again- humiliated in the elections.

    The Democrat Party can’t win.

  4. 4 Marvo 16 July 2008 at 4:00 am

    “The opposition can’t let that happen… because they know that they would be -again- humiliated in the elections.”

    I guess the Democrat Party AND the PPP both know how easily the populous here in Thailand are bought. It all seems too easy. The only body with any power making some kind of stand seems to be the judiciary – a real thorn in the PPPs side!

  5. 5 Bob 16 July 2008 at 5:05 am

    What is a cubic litre?

    The government will pay water bills for low-income households that consume fewer than 50 cubic litres each month.

  6. 6 Marvo 16 July 2008 at 5:40 am

    “What is a cubic litre?”

    A container of internal dimensions measuring 10cm x 10cm x 10cm will contain a “cubic” litre 😉 But seriously,

    50 litres a month is only 1.67 litres a day. That’s not much for a houshold. Are we sure that info is correct? How many Satang would 50 litres of government water cost?

  7. 7 ThaiCrisis 16 July 2008 at 6:19 am

    No. A “cubic meter” for water = 1 000 liters.

    For instance, in France, the water consumption is 150 liters per day per person (= 45 m3 per month)

    Therefore, the figure for a thai household of 50 m3 per month seems to correct.

  8. 8 Bangkok Pundit 16 July 2008 at 6:30 am

    Is it a subsidy or a reduction in excise tax? The article you quote says it is a reduction in excise tax, but you say it is a increase in the subsidy.

  9. 9 ThaiCrisis 16 July 2008 at 7:00 am

    Well… for me it’s the same.

    To reduce the price of a good by cutting taxes or “giving” a “gift” to pay for it, I don’t see the difference (even though in the accounting world it would be different).

    Because, eventually, the state by giving up an income is “giving away” this income… so it becomes an expense, I mean a loss.

    My brain hurts. “Tik mak !” like our thai friends love to say. 😉

  10. 10 MSB 16 July 2008 at 7:32 am

    It is in fact a cut in tax and NOT a subsidy and there is a massive difference in that there is no actual cost involved, only a potential loss in revenue. And with demand falling in theory they may not face a loss as high as projected.

    The free buss and electricity etc is straight out of the Thaksin play book and is very smart. Shore up the popular support when you are under attack. The Dems can’t attack this without coming across as anti the poor.

  11. 11 ThaiCrisis 16 July 2008 at 7:59 am

    ??? “No actual cost involved” and “only potential loss in revenue” ?

    You have a strange understanding of the situation.

    -the taxes on diesel are not virtual. They don’t end in some kind of saving account. They go directly into the state pockets. And the state is working within a budget : revenues and expenses.
    You cut a revenue = you cut an expense, or your increase debt… or other taxes.

    -as for the “potential loss”, again I don’t agree. Diesel is not flowers, something that you can avoid to buy. It’s an essential good for the economy. All the theories against falling demand (at least for diesel) are totally idiotic. Particularily on such short term (6 months).
    It’s a none sense to assume that all the trucks in Thailand are going to switch to NGV, gasohol or whatever in 6 months.

    We consume 51 millions of liters of diesel PER DAY (average from january to may 2008 )

    And this average is going up, compare to last year (and 2007 was up compare to 2006).

    So at 2.30 x 51 millions = 117 millions THB of direct LOSSES per day for the state.

    You don’t want to call it a “subsidy”… fair enough.

  12. 12 tom_bkk 16 July 2008 at 11:59 am

    Well all of these might for sure have an impact on the CPI, I dont know how Thailand calculates their “consumer basket” at CPI but water, electricity, busses etc. are for sure a certain part of it.

    I believe that this “noble” Santa Claus present helps for sure some poor people – but agree it might be some kind of a “populistic” measure or indeed a “rescue package”

    However, the tax cut at Diesel is more or less not sustainable bu..hit – waste of money.

    And NO I believe it wont rise the economic growth at all – or would be consider “poor people” as high consumers? Of course not.

    Electricity for free? At the current cost of energy? Huuhhh

    But the rest of the package I would at least not call completely insane – as it will at least not fuel the inflation further (right now .. wait 6 Month) …

  13. 13 msb 19 July 2008 at 9:49 am

    well gov revenue could also go up if lower fuel costs lead to higher profits and companies pay more tax.

  1. 1 Samak's got my vote. - Page 2 - Ajarn Forum - Living and Teaching In Thailand Trackback on 7 August 2008 at 5:23 pm

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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