After tax waiver for air conditioners… tax waiver for spas ?

The government pursues, with great care, its Lala Santa Claus policies.

Let’s take for instance… air conditioners…

Abhisit decided to remove the 15 % excise tax on air-conditioners (read here), to boost… local sales (from local manufacturers)
But then a few days later we learn :

“For a particular category, a Chinese air-conditioner retails for Bt8,000, against Bt20,000 for a Thai unit. This FTA will cause difficulties for domestic sales and exports to neighbouring countries” (Nation)

It’s obvious : the problem is not this tax, the problem is first the crisis (people and businesses have less money to spend, even if there is discount)… and then the competition. Eventually, to remove the tax is a nice gift made to the… chinese manufacturers !

Don’t get me wrong : I do not believe government should impose a tax on air-conditioners… What I criticize is the timing and then the fact that they don’t think about the consequences of such decisions.

There is no coherence, whatsoever. The government just adds some inane policies on top of each other, like gifts, without any broad analysis.

Let’s take the latest example… spas.

The Finance Ministry will soon discuss whether to waive the 10percent business tax on spas, to promote Thailand as a spa hub. Such a move is expected to draw more tourists and create jobs. (Nation)

Once the laugh is over about the “hub” obsession… the government shows again that it’s totally clueless.

The problem of the spa industry is not a tax. The problem is that… virtually all hotels in Thailand now are “spa” ! (and “boutique” too). 😉

I mean It couldn’t be more ridiculous. As ridiculous as increasing the number of 5 stars hotels for instance.

The market is totally overwhelmed by spas. And the demand can’t follow. It’s just impossible. Few people can afford to pay several thousands of THB for one hour of “spa”.

The bottom line is : with all those idiotic tax cuts, the government will lose precious ressources ( in a budget deficit situation)… and meanwhile will achieve zero, NIL, nada as far as “job creation” or “stimulation of the economy” is concerned.

Abhisit and his ministers are like headless chicken, running amok, agitated, and taking decision for the economy like… taking a dump.

3 Responses to “After tax waiver for air conditioners… tax waiver for spas ?”

  1. 1 MongerSEA 31 August 2009 at 7:20 am

    Poor planning skills are Thailand’s Achilles Heel. From the amazingly bad infrastructure to industrial and agricultural policy to business planning, no one seems to have a clue. There’s no need to indulge in generalizations and say that all Thais are stupid, but it might be useful to let them know that just being Thai doesn’t mean you’re smart either…

    The overcapacity in almost every potentially profitable market segment inevitably leads to a boom followed by a bust. Witness as just one example the dozen geniuses who thought it would be a good idea to open optical shops on the corner of Phaya Thai and Petchaburi Roads in Bangkok. More than half of those shops are now closed including one large franchise and the rest seem to be on their last legs.

    There’s nothing inherently wrong with the idea of districts devoted to one particular type of goods. The problem is that the Thais carry it to extremes (perhaps assuming business is good because there’s a business there already) and with a naive ignorance of the broader range of factors like market size and consumer traffic that would go into any sensible due diligence.

  2. 2 fall 31 August 2009 at 10:52 pm

    Ah, I can see it clearly as day.
    Tourist flooding into Thailand due to a 50% reduction in spa price.
    Thai Airways booked to overflow and all economics problem solved.

  3. 3 CNXJeffrey 1 September 2009 at 9:07 am

    It would be interesting to know of who owns and operates most (if not all) of these spa-resorts.
    Payback for ‘The Boys’, et-al….?

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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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