Low-income people use welfare cards to pay for goods at a shop in Nakhon Ratchasima.
Repayment of VAT to the government’s welfare smartcard holders is scheduled to start in August, says Deputy Prime Minister Somkid Jatusripitak.
The VAT payback is the government’s new short-term measure to assist low-income earners, he said. A debt repayment suspension scheme for farmers will also be implemented next month, Mr Somkid said.
A few weeks ago he instructed the Revenue Department to seek measures to alleviate the consumption tax for people living in poverty as part of government efforts to create more disposable income for them and strengthen their purchasing power.
Although the country’s economy expanded at its fastest pace in 20 quarters — 4.8% year-on-year in the first quarter — the recovery remains uneven, with low-income brackets still facing hardship. Addressing the root causes of poverty is a government priority and has provided both financial and work training support to those who are at the bottom end of the income scale through the government’s welfare and subsidy scheme.
Under the scheme, the government is giving a monthly living allowance of 200-300 baht to 11.4 million people earning no more than 100,000 baht a year to buy staple goods at Thong Fah Pracha Rat shops. Those who signed up for job training receive an additional living allowance of 100-200 baht a month.
Some 5.3 million out of 11.4 million recipients of the government’s welfare and subsidy scheme are living below the national poverty line, earning less than 30,000 baht a year.
Permanent secretary for finance Prasong Poontaneat said the Finance Ministry could consider allowing the government’s welfare recipients to get back VAT paid for purchasing goods and services at other shops, in addition to Thong Fah Pracha Rat shops.
But these shops are required to install IT systems to provide information to the Revenue Department.
The VAT payback will not be capped and such reimbursement is not considered a tax refund, as it will be financed with the state’s annual budget, Mr Prasong said.
Despite having no limitation on the VAT return, he said the Finance Ministry is not worried about irregularity in spending for smart cardholders, as their living allowance could be scrapped in cases where spending does not match income.
For bedridden patients and the disabled, he said they can give mandates to others to use the welfare smart cards to buy products at Thong Fah Pracha Rat shops.
The government opened the new round of registration from May to June to allow additional low-income earners, particularly the disabled, elderly and bedridden patients, to register for the state subsidies. There were 1.1 million registrants.
According to a recent Interior Ministry survey, 91,000 disabled and 21,000 bedridden patients signed up for the government’s welfare and subsidy scheme.