Boss, boss, we screwed up again ! Tax cuts… reduce tax collection

After “water is a liquid“… here is the new striking discovery made by the guys at the Finance Ministery : tax cuts -usually- lead to lower tax collection.

Damned. Give me my Plavix pill, I’m going to have a stroke. It’s overwhelming. πŸ˜‰

So let’s recap :
-the bozos working alledgely for the alleged government, scared to death by the explosion of oil prices and inflation last july, decided a massive tax cut on diesel along with some other gifts (free water, electricity, blabla). For 6 months.

-people were happy, living in Thaiwonderland.

-of course no one thought about the cost of this ingenious and audacious plan. Because, there are always costs. No free lunch. Never. Ever.

Now, we start to see the first fallouts. Tax cuts = lower tax collection = less investment or spending somewhere else.

It’s universaly true, it’s Economy 101. Even in Thaiwonderland.

Revenues for the first month of fiscal 2009 totalled 91.9 billion baht, a drop of 18.4% from the same period last year, according to Somchai Sujjapongse, the director-general of the Fiscal Policy Office.

Dr Somchai said tax revenues missed their budget targets for the month, particularly taxes on oil revenues due to the government’s anti-inflation programme.

The six-point programme, which expires in January, includes excise tax reductions on diesel and gasohol and was adopted earlier this year when oil prices hit a peak of nearly $150 per barrel.

Dr Somchai said the Electricity Generating Authority of Thailand also delayed profit transfers to the Finance Ministry worth 7.15 billion baht in October, further affecting budget figures for the month.

But Dr Somchai noted that value-added tax collections, a proxy for the health of domestic consumption and spending, rose 9.2% in October from the year before and exceeded targets by 3.1%.

Corporate income tax payments also exceeded figures last year by 2.2% and rose 9.4% over targets, suggesting that revenues and profits for the private sector remained relatively healthy despite the downturn in the global economy.

But excise tax revenues for beer, alcoholic beverages, tobacco and autos all posted declines year-on-year in October, showing that consumers were cutting spending on unnecessary goods and delaying large spending decisions. (Bangkok Post)

By the way, it’s a clear confirmation that we are going down. Even without tax cuts… the economic downturn starts to show its ugly face on the tax collection figures.

Quick; chop chop ! Call the boiler room. We need them… πŸ˜‰

4 Responses to “Boss, boss, we screwed up again ! Tax cuts… reduce tax collection”


  1. 1 tom_bkk 12 November 2008 at 10:07 am

    Hehe, maybe they believe – that the cuts will result in a higher consumption – so that the losses are balanced out by that πŸ˜‰

    A funny dangling reference πŸ˜‰

    I will use my car up from now to by cigarettes in the shop 50m away …

  2. 2 ThaiCrisis 12 November 2008 at 10:29 am

    Sure… enjoy it… Because after january… finished. πŸ˜‰

  3. 3 Bob 12 November 2008 at 1:53 pm

    Revenues for the first month of fiscal 2009 totalled 91.9 billion baht,

    Am I the only one who got left behind in 2008?

  4. 4 ThaiCrisis 12 November 2008 at 2:19 pm

    There is an easy explanation to this mystery : fiscal year 2009.
    πŸ˜‰

    Fiscal year 2009 has started october 1 2008. Will end on september 30 2009.


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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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