Chart, VAT collection and total net revenues in march : negative again

(Source report from the Ministry of Finances for march 2009).

-VAT collections plunged by 18 %, compared to march 2008 (in february, the drop was 25 %).
-total net revenues fell 1,5 % (-21 % in february)

It looks a litte bit better. But… it’s the base effect. March 2008 was weak, with a subsidy on oil taxes for instance.

And the VAT, which a bigger indicator, remains totally depressed. The consumption is still falling, despite all the “stimulation” lunacies from the government… Bad news for the GDP.

Car taxes and exports taxes are crashing. Perfectly normal. Sales of cars are falling, and exports too. One item explodes though : taxes on liquor (+55 %) !

After playing Santa Claus, the government is trying by every means to replenish the empty coffers, with “silent” and/or “sin” taxes. 😉



Now, here is the detail of the report from Finance Ministry.


The forecast is easy to make : fasten your seatbelt in april (because april 2008 was strong with 127 billions THB in total net revenues, and because the crisis is deepening, riots etc.) and also in may.

May is traditionally a very strong month, with the first part of corporate taxes… In may 2008, the total net revenues was 273 billions THB… All the clowns at the government were relying on this famous month (and september too, the second part) to design their budget.

They are going to suffer… Why ? Because the first (the very first) effects of the recession on businesses profits, hence on corporate taxes, will show up in may… Corporate taxes are a lagging indicator…

The real nightmare will be in september.

Anyway, the shit is about to hit the fan big time. And this is precisely why Abhisit made a striking U-Turn a few days ago (he started to increase the budget and the budget deficit following the “stimulus logic”, and now he wants to make some cuts ! read here).

[to see my article about february, click here]

Look how critical is the situation…

Tax refunds for exporters may be delayed due to concerns over fraud and falling fiscal revenues caused by the recession, the Finance Ministry says.

But business leaders argue that delaying refunds for exporters only increases the pressure on their operations, at a time when demand has plummeted due to the global downturn.

Members of various foreign chambers of commerce, including India, Japan, China, Britain and the US, met with Deputy Finance Minister Pradit Phataraprasit yesterday to express their disapproval over the slow pace of repayments.
Mr Pradit said while he understood the concerns voiced by local businesses, the government was facing its own financial pressures, as tax revenues for the fiscal year ending September are expected to fall as much as 280 billion baht under target.Tax agencies, as a result, were under added pressure to ensure that claims were legitimate, resulting in processing delays.
(Bangkok Post)

The story about fraud is of course totally laughable ! 😉 Classic (but so pathetic) face-saving exercise.

Exporters enjoy many privileges, because they are so important for the thai economy… So when the government plays with them like this, with empty pockets… it shows that it is really against the wall !

4 Responses to “Chart, VAT collection and total net revenues in march : negative again”

  1. 1 Krid 26 April 2009 at 12:31 pm

    Delaying the refunds is of course disgusting and illegal, especially with exporters facing cashflow problems already. But it shows the sinister privilege of the state over private interest in Thailand. Imagine a private business delaying tax payments because of “financial pressures”, it’s immediate fines and usurious interest claims (1.5 percent per month) by the tax office. Of course the government will never pay a single satang of interest on the delayed payments.
    Again this shows my pet peeve “lack of long-term thinking in Thailand” as the gov. practice further undermines the rule of law in Thailand and thus investor confidence.
    And sadly, evidence suggests that this practice will extend to all refunds and tax credit including witholding tax and VAT credit for local businesses, not only exporters. Again, this will further undermine the tax compliance of businesses and create an even larger revenue shortfall in the future.

  2. 2 john 26 April 2009 at 3:14 pm

    @krid state / mafia hard to tell the difference sometimes, even more difficult in Thailand…

  3. 3 antipadshist 26 April 2009 at 11:40 pm

    Korn on WSJ

    Thai Fin Min: Committed To New Investment Plan To Boost Econ

    “The government has forecast the economy will contract by 3% this year, which would be the first time it has shrunk in more than a decade.”

    another source it seems give more realistic number :

    “The Chamber of Commerce University on Thursday predicted Thailand’s recession-bound economy would shrink 5.3 percent this year if political unrest continued.”

    at least one other source confimrs this :

    “in the worst case scenario that the Thai economy would contract as much as 5.3 percent for 2009, according to a latest survey, which asked over 800 business operators in the country’s agriculture, trade, service, and manufacturing sector, by the Center for Economic and Business Forecasting of the Thai Chamber of Commerce”

  4. 4 sammy 28 May 2009 at 10:00 pm

    foreigners should get their wealth out of here now. It is already happening to them. Big tax bills, dissallowance of deductions, imputed income to tax, etc, etc. Now talk of taxing companies that hire foreigners, foreigners cannot serve on condo association, etc., etc,. etc. Many people who own houses through a company are being hit for corporate income taxes on imputed income even though there is no income or given choice to give up title to house, etc., etc. Police are doing snatch and grab false accusation of crime fixed by big bribe to let you go if you leave the country, leaving investments behind. Its going to get very ugly. Many are getting out now. Those who stay should keep money offshore. Now.

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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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