Playing with taxes could prove costly

In a public appearance at Prachin Buri on March 9, Prime Minister Prayut Chan-o-cha floated a trial balloon of raising the VAT by 1% through national sacrifice, but he failed to sell the idea. (Photo courtesy Government House)

' In this world nothing can be said to be certain, except death and taxes," Benjamin Franklin once wrote. However, as the Reaper is sure to collect the dead, governments may not always be able to do the same with taxes.

Prime Minister Prayut Chan-o-cha tested the waters two weeks ago to gauge public reaction to a government idea to raise Value Added Tax (VAT) from 7% to 8%. Met with an outcry, he backed down the very next day, mumbling in denial that he had never said such a thing. The 7% rate is seen a burden enough for consumers during the current economic doldrums.

To be fair, Gen Prayut's idea may have validity. Since Thailand adopted VAT in 1992, the rate has always been a sore point for debate. From the beginning, the rate was set at 10%. And it was easy to calculate. And with future economic growth fairly predictable during that time, the flow of revenue was seen as being enough to cover government expenditures for decades to come.

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