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Government unveils its populist plans

The Pheu Thai-led government has opened its gift basket wider, promising to raise the salaries of civil servants and government employees, in addition to offering benefits to first-time home and car buyers, with the policies expected to be implemented at the beginning of next year.

It is estimated that the salary-related policy will require expenditure of Bt24.5 billion annually, while the cost of the other two policies remains unclear.

The minimum Bt15,000 monthly pay policy would benefit 346,365 government employees who currently earn less than that threshold, according to the Finance Ministry.

“The adjustment is in line with the government’s policy to offer more appropriate pay to government officers, to reflect the higher cost of living and boost the economy. The new pay structure should take effect in January 2012, as a New Year gift to all,” said Deputy Finance Minister Viroon Tejapaibul.

Yesterday, he submitted to the Comptroller General’s Department documents listing five groups of state workers qualifying for pay rises: civil servants, contract employees, desk soldiers, and permanent and temporary employees of state agencies. The total number of people in these groups is 649,323, but only the 346,365 of them who hold bachelor’s degrees or higher will enjoy an increase in monthly allowances raising their monthly pay to Bt15,000. Those holding degrees below the bachelor’s level will also enjoy higher allowances, though the minimum pay would not be as high as Bt15,000. Those whose monthly pay is below Bt9,000 would see their pay raised to that level.

Finance Ministry regulations are to be amended to facilitate the payment of higher allowances, Viroon said. He will forward the terms and conditions to the Cabinet soon, he said.

On the incentives for first-time home-buyers, two options are in the picture. According to Viroon, the Government Housing Bank could charge a zero mortgage rate for three years. But Deputy Finance Minister Boonsong Teriyaphirom said tax deductions up to Bt300,000 could be on offer.

According to Boonsong, eligible house prices must not exceed Bt3 million to Bt4 million. Many details are still to be worked out, including the total amount of mortgages, as this will affect the government’s annual budget.

On the incentives for car buyers, the Excise Department and Revenue Department should finalise them by next week, Boonsong said.

“They have yet to work out all the implementation issues,” he said. The government wants all groups to benefit from the tax breaks, but the Revenue Department may decide that it can only offer tax rebates for those already in the existing tax base, he said.

Democrat Party MP and former finance minister Korn Chatikavanij estimated that to fulfil all its election promises, the government would have to spend Bt900 billion more for the year 2012, but only Bt300 billion would be on the balance sheet.

Also yesterday, Commerce Minister Kittiratt Na-Ranong said the government’s rice-pledging programme would be implemented for as long as one year as a pilot project to monitor domestic rice prices. If the prices do not increase, the government will immediately stop the subsidy project and turn to another strategy: reducing plantation area. Under this policy, all rice seed will come under the price subsidy programme. The government offers a very high subsidy price of Bt15,000 for white paddy rice and Bt20,000 for jasmine paddy rice.

Source: The Nation

ThaiVest Editorial Team

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