Revenue falls lead to further fears of economic slowdown

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Revenue falls lead to further fears of economic slowdown

While the ongoing political crisis in Bangkok is certainly impacting business, there are suggestions the Thai economy in general is experiencing worrying signs that may indicate it is beginning to falter.

The biggest single factor pointing to the economic slowdown is the fall in tax collections in the first four months of the fiscal year, from October 2013 to the end of January. The Revenue, Excise and Customs departments collected tax revenue of 650 billion baht, which fell 3.8 percent short of the target set by the government. That 3.8 percent works out at 25.6 billion baht.

That said, the 650 billion baht collected actually exceeded the October 2012 to January 2013 fiscal returns by 18.2 billion baht, so the ‘loss’ may be more due to a failure to get the projected target figures correct than a faltering economy. In percentage terms, falling just under four percent below target is not really a major concern, at least in the short term. There’s almost no doubt that revenue figures for the next four month period will most likely provide a more compelling argument regarding overall economic direction.

It was the Customs department which fell the shortest on its projected targets: coming in 16.6 percent below. The suggestion is that importers are concerned about the political tensions and general uncertainty so many have decided it’s better to delay bringing in products until such time as things have become more settled. The VAT on some two to three billion baht was shaved off over the first four months of the fiscal year. This was especially noticeable in January, traditionally a month when retailers enjoy strong sales, but not so this year.

The Excise department missed its target by 10.5 percent (perhaps people are tightening their ‘drinking belts’), while the Revenue department missed their targets by a mere 0.4 percent.

Equally, the government had net revenue of 663 billion baht, and this managed to break the projected target by a relatively small 0.4 percent. This is promising news considering the overall political situation. Intriguingly, the higher revenue came via state enterprises, which remitted almost 25 percent more revenue than projected.

State enterprises sent a welcome 61.9 billion baht flowing into the coffers of the central government, and this was more than double the amount sent in the same four-month fiscal period 2012-2013. There has been no explanation about the how’s or why’s of this dramatic difference.

As well, government agencies contributed 43 billion baht in revenue, which was actually 38 percent down year-on-year, but above the target originally projected. Once again, the percentage swings are quite dramatic and there is little intelligence forthcoming on the reasons for these quite large movements.