More taxes may not be a bad thing

Adverts like these are all the rage, offering deals on car tyres - which in turn bring tax returns.

On Monday, I spent an unusually long time -- more than half a day -- just to get my car tyres replaced at a shop. Usually, it takes about two hours to get the old tyres replaced with the new ones.

The long wait was caused by car owners who flocked to the shop all at the same time to take advantage of the government's "New Year's Gift" -- that is, tax breaks for consumers.

Buyers can claim a maximum of a 15,000-baht income tax deduction on purchases of local rubber products, books (including e-books) and One Tambon One Product (Otop) goods. This scheme runs from Dec 15 to Jan 16.

Anchalee Kongrut writes about the environment in the Life section, Bangkok Post.

The outcome is promising. Apart from the crowded tyre shop, my favourite book store also enjoyed a rare moment of customers lining up to buy books. (It is usually one of the most quiet and least crowded stores in Bangkok!). Sale of Otop products are also reportedly quite brisk.

But the high demand for tyres has cause rubber prices to surge. On Tuesday, the price of raw rubber at market in Surat Thani rose above 40 baht per kilogramme, the highest in the last two months.

While the price surge might not be directly caused by the tax break -- as the Surat Thani market only trades raw rubber, not car tyres -- it bodes well for rubber production and market prices.

The government has also come up with other policies to boost the rubber industry. Instead of splashing out on subsidies to prop up prices, it has rolled out several measures to promote the innovative use of rubber and its value-added end products -- for example, the incorporation of rubber products in road construction, and the production of flooring for sport stadiums and playgrounds.

The latest tax scheme is a good example which demonstrates how taxes can be used to shape consumer behaviour, and promote local products.

I am a firm believer in such a strategy. Taxes can also be used to promote reading, local tourism or even to discourage unhealthy habits, such as smoking.

For the New Year, I have a wish list for the government.

First and foremost, I would like to see a tax on plastic packaging imposed on both producers and consumers to encourage its responsible production and consumption. The revenue can be spent on garbage management systems and facilities.

In fact, the Pollution Control Department has been trying to propose a bill on plastic packaging for almost two decades. But mercenaries, especially those from the industrial sector, have successfully derailed the effort.

My other wish is to see tax breaks for organic food and produce, the growth in sales and production of which have limited by high market prices for such goods.

Organic farms make up less than 0.5% of the entire 165 million rai of farmland in Thailand. The sector seriously needs tax incentives to help boost consumption, production, and market expansion.

Tax breaks should be given to producers and buyers of organic food and produces. Tax deductions for consumers can be given during certain periods of the year (or even for a whole year) while producers can be given tax breaks for a longer period. These directives can also help with the mainstreaming of organic food and produces.

There is nothing new to the idea. The Tunisian government has given a 10-year income tax holiday for organic farms and businesses. France have been giving tax credits for organic farmers since 2006 to help small-scale farmers to expand their farms.

In Norway, certain organic products, such as processed vegetables, juices and baby foods are entitled to reduced import tariffs.

Thai farmers have also called for the government to use tax measures to help the organic farming sector. At the Thailand Research Fund's seminar on organic farm policy last year, organic farmers from Nakhon Pathom, Pathum Thani and Ratchaburi proposed that tax credit should be given to organic businesses to encourage farmers to stop using highly toxic chemicals.

Some might fear that the state will lose revenue if more tax reliefs are implemented. But tax breaks can eventually bring about gains for the state. What we will get in return are safer foods and a cleaner environment. The state won't need to spend as much on public health, as people will be generally healthier.

The tax breaks on rubber goods, books and Otop products are a good initiative that has shown promising results.

Policymakers should have the political will to tax plastic bags and packages, and to provide tax breaks for producers of organic food and produce.