Thailand: to Give or not to Give Money to Domestic Tourists

Thailand golden temple in Khon Kaen

Thailand announced on Wednesday to hand over THB 1,500 in cash to each Thai tourist who would visit a domestic destination. The idea was short lived: on Friday, the Ministry of Finance announced to scrap the scheme following rising critics… However for how long?

The idea of giving money to Thai travellers to stimulate domestic destinations is not new in Thailand. Already in 2014, the military government of General Prayut had decided to provide tax breaks for domestic tour packages and hotel accommodation to boost the local tourism industry, battered by months of political instability and by a military coup. Adopted in October, the measure was giving businesses and private individuals the possibility to deduct taxes on expenses for a year time.  The maximum deduction from taxable income was capped at THB 15,000 per person.

The amount of deduction was costing the government some THB 400 million.

This time, the government is looking at boosting arrivals to secondary destinations and stimulate tourism activities which are slowing down since the start of the year. During the week, PM Prayut Chan-o-cha announced a plan to hand out THB 1,500 baht in cash for travellers keen to visit 55 second-tier provinces.

“As the country’s export sector, a key contributor to the country’s economic growth, is crippled by the US-China trade war, Thailand will have to spur its economic growth by encouraging people to spend domestically,” was by then justifying General Prayut.

According to reports from local media, the THB 1,500 was to be give to the first 10 million people who registered to participate in the scheme aged at least 18 years old. The measure would cost far more than the 2014 scheme as government would then spend THB 15 billion.

Following the money allocation, Thai travellers would have n be required to travel and spend the money in second-tier provinces during this quarter.

However, the government made a complete U-turn on Friday as critics started to highlight that money would be better spent on other projects. Some critics point out that the scheme was to also assure support for the Military-backed party which could form the next government following Thailand election last March.

Instead, the Ministry of Finance is now focusing to extend again the tax deduction provided to domestic tourists for their travel expenses. The Ministry raised the cap for the deduction, which now will top THB20,000 per person. The scheme however does not make distinctions between second-tier cities and primary destinations. The idea of giving money is actually not so much needed by Thai travellers who already benefit of many incentives, discounts and reduced entry prices that are only available for locals.