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Thailand: New Destination for Factory Taxes
Source: bangkokpost.com
Source Date: Friday, July 23, 2010
Country: Thailand
Created: Jul 25, 2010

The Finance Ministry should speed up passage of a new law that would allocate tax revenues from factories in the Eastern Seaboard to local authorities instead of the central government, says Deputy Prime Minister Trairong Suwannakhiri.

Once the law takes effect, more tax revenues could be channelled for local development in the area, a Finance Ministry official told the Eastern Seaboard Development Committee yesterday. Ministry officials are still drafting the law.

Currently, tax collections from factories in the Eastern Seaboard are sent to the central government and there is little benefit to the local area.The committee wants the Finance and the Natural Resources and Environment ministries to push for the implementation of a green tax as well.

"The industrial investments in Rayong total around 900 billion baht but only modest amounts of tax income are allocated to the province while local people have faced a big environmental impact from these factories," Mr Trairong said at the committee meeting yesterday.

Passage of the two new tax-related laws would help spur progress on a development plan to make Rayong an "eco industrial town" and a model for development in other areas.

Mr Trairong said the current impasse over environmental regulation at the giant Map Ta Phut industrial estate in Rayong was being watched closely by people in southern Thailand as well, since they are concerned about the potential impact of increased industrial activity in their area.

Governments for two decades have been touting the so-called Southern Seaboard as a new industrial hub but little progress has been made, despite the expenditure of hundreds of millions of baht in tax money on studies.

Mr Trairong said Industry Ministry was expected to finalise a master plan within the four or five months for the Rayong Eco Industrial Town.

In the short term, he said, the Finance Ministry would improve regulations to allocate budgets for the Rayong Provincial Administration. The allocation should be based on the real population in the area and not just the registered figure.

In 2009, there were an estimated 1.67 million people living and working in Rayong but a registered population of just 600,000. The rest were people who had migrated to work at the hundreds of factories in the province.

The National Economic and Social Development Board has projected that Rayong's population will increase by 2.34 times by 2017 from the official figure of 600,000.

Currently, the municipality of Mab Ta Phut is allocated 300 million baht per year while the Rayong Provincial Administration receives 600-700 million baht.

The budget is not enough for infrastructure development in the fast-growing area, local officials say.
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