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Thailand Expects $2 Billion in Stimulus From Tax Rebate Plan

Shoppers inside an indoor market in Chiang Mai, Thailand. (Valeria Mongelli/Bloomberg)

(Bloomberg) -- Thailand’s Finance Ministry expects a proposed tax rebate program to boost consumption early next year, helping stimulate Southeast Asia’s second-largest economy.

The tax refund, planned to run from Jan. 15 to Feb. 28, is seen to yield 70 billion baht ($2 billion) in additional consumer spending but will cost the government about 10 billion baht in foregone revenue, Deputy Finance Minister Julapun Amornvivat told reporters on Friday.

The Thai central bank left its key interest rate unchanged early this week, warning of uncertainties as it resists government calls for further monetary easing. It kept this year’s growth forecast at 2.7%, while penciling in a 2.9% expansion in 2025. The economy faces a slew of challenges including uncertainties from policies in major economies, the monetary authority said. 

Under the rebate plan, taxpayers can deduct from their taxable incomes as much as 50,000 baht in spending on some goods and services from businesses registered in the e-tax system. The eligible purchases include those from tour packages and hotel accommodations. The plan will be proposed for cabinet approval next week, Julapun said.

Besides the tax rebate, the government is implementing a cash subsidy plan to support farmers and a cash handout program. The trio of economic-stimulus measures will inject as much as 140 billion baht into the Thai economy through early 2025, he said.

READ: Thai PM Vows to End Business Monopolies, Plans Cash Handouts

Prime Minister Paetongtarn Shinawatra has earlier said the government will continue a cash handout program next year with about 4 million senior citizens in line for 10,000 baht each by Chinese New Year at the end of January.

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