In less than a month of Thailand’s new Cabinet, two economic stimulus packages came out to boost the economy.

1)       US$3.3 billion economic stimulus package, approved on January 13

Prime Minister Abhisit Vejjajiva said "The measures are based on the idea of reviving the economy directly, that is, adding money in people's pockets. Giving money directly to people is the most effective way. It will lead to more spending that will help industrial, agricultural and business sectors."

The funds will be used to support social security, free education programs, create jobs and provide low-interest loans to farmers. The government will also extend a package of economic stimulus measures implemented by the previous government by another 6 months. These include lower water and electricity charges, free rides on some of Bangkok's public buses and free third-class train rides nationwide. A portion of the funds will be doled out in a one-off allowance of US$57 to 9 millions of low-income employees and government officials. Only those who earn less than US$400 a month will qualify.

2)       US$1.2 billion economic stimulus package of tax cuts, approved on January 20

Prime Minister Abhisit Vejjajiva said the new measures would further help ease the cost of living, help small and medium-sized businesses, and stimulate the property market.

The package includes a new personal income tax deduction on mortgage-loan principal payments of up to US$8,572 (300,000 baht) per year. Under existing rules, only interest payments of up to US$2,857 (100,000 baht) per year can be deducted from personal income tax. The property tax incentives will apply only to new homebuyers who make purchases this year. Existing homebuyers will still be eligible for a tax deduction of US$2,857 a year for mortgage interest payments.

Small and medium-sized enterprises (SMEs) in all sectors earning less than US$28,572 (1 million baht) will also be exempted from income taxes. The tax allowance will benefit up to 970,000 SMEs. The cabinet also approved a proposal to raise a tax allowance for community enterprises or community projects with an income of US$51,430 (1.8 million baht), a rise from US$34,286 (1.2 million baht). As part of an attempt to boost the venture capital business, the government also agreed to exempt income tax on gains arising from share transfers of SMEs, and scrap initial capital requirements for the venture capital. Exemptions on income tax, value-added tax, special business tax and stamp tax on income generated from asset transfers, asset disposals and other transactions stemming from debt restructuring were also given.

As a tourism stimulus package, the government will allow higher tax deductions for companies that pay for seminars or meetings. The cabinet agreed to waive visa fees for 3 months, cut the landing fee by 20% for regular flights and up to 50% for chartered flights, and waive property tax for hotel operators. An exemption on entrance fees for national parks was allowed in a bid to revive its key tourism industry, which was battered by recent political turmoil.

                                                                                                             As of January, 2009