EXPORTERS SEEK TAX CUTS FOR REST OF YEAR

       The government has been urged to cut withholding and income taxes applying to exporters as an urgent measure to boost export growth in the remaining months of 2009.
       The call was made yesterday by exporters themselves, saying that proposed cuts to import duties may be ineffective in bolstering export growth in all sectors.
       Next week the Commerce Ministry is to propose a cut in import duties to the Cabinet, as a measure to promote export growth in the second half of the year. The measure was suggested earlier by 23 trade associations.
       However, Thai Garment Manufacturers Association secretary-general Wallop Vitanakorn said that import tariffs for his industry were already very low. Only 1-per-cent import duty is payable on yarn and 5 per cent on fabric. Import tariffs on machinery for the indystry are also only 1 per cent, he said.
       The Asean-China Free Trade Agreement will also abolish import taxes on textile and fabric imports next year.
       To ensure that the government's support measures will help all industrial sectors, the government should cut withholding taxes for all exporters from 3 per cent to 1 per cent instead of cutting import duties, he said.
       Although the Finance Ministry may lose some income, it should not face any legal difficulties in cutting withholding taxes to give the export sector temporary help for the remaining month of the year, Wallop said.
       He also called for the government to reduce company income taxes from 30 per cent to 25 or 28 per cent for exporters, because high tax collections were part of the burden being carried by exporters.
       Wallop said the government had already reduced income taxes for stocl-marketing investors. It should also consider cutting taxes for the export sector, which was a major engine driving Thailand's economic growth.
       In addition, to increase liquidity for small- and medium-sizes enterprises (SMEs), Wallop called for government-owned banks to relax the qualifications required for loan finance.
       For example, government banks should lower their collateral or mortgage security requirements from 80 to 100 per cent of total loan value to less than 50 per cent for SMEs.
       Thai Frozen Foods Association president Panisual Jamnanwej said that in this industry, import tariffs were major burden only for shrimp exporters.
       He suggested that the government should consider cutting import tariffs on shrimp feed because this was a major cost of production for shrimp exporters.
       To ensure smooth export growth, the government should stabilise the exhcange rate, as the baht's apprecition had caused difficulties for exporters' competitiveness, he said.
       A Commerce Ministry source said the Commerce and Finance Ministries had agreed that, instead of cutting taxes related to imports, they should seek new measures that could be implemented more rapidly.
       "The ministry has asked exporters from each tradle association to send their opinions, and on which products they want the government to cut import duties. Responses will be returned to the ministry this week for passing on for the Cabinet's approval, as an urgent measure to lower the burden on exporters," the source said.
       Previously, a proposal to cut related import tariffs to help exporters was rejected by the Finance Ministry as it involved legal changes.
       Nevertheless, the source said cuts to import tariffs should be implemented within a month of receiving Cabinet's approval. This would ensure that exports could return to positive growth next month or in October.
       This would help to avoid a drop in exports earlier projected at a contraction of 18 to 20 per cent, and would mean a drop of only 10 to 13 per cent for the entire year, the source said.