HUMAN RIGHTS-Weak Cover-Up

the large surpluses generated in the government budget through rapid growth of tax revenue and investment of these surpluses in building the infrastructure in the poorer northern part of the country. In Thailand, as in most other countries with impressive fiscal adjustment records, taxation of domestic consumption through the value added tax played a central role in augmenting government revenue. In our case, while the efforts to get the states' sales taxes replaced with VAT are yet to fructify, the centre's excise revenues which constitute the other principal element of domestic trade taxes remain in the doldrums, growing by only 10.7 per cent annually since the reforms began (and only 10.1 percent in 1995-96). It is customs duties with a growth of 32 percent along with the income taxes that have sustained the overall growth of the centre's GTR in 1995-96 (when the proportion of customs duties in GTR shot up to 32 percent after declining to 29 per cent, reversing the trend to wards reduced dependence on foreign trade taxes). Even with a surge of this order in customs receipts in 1995-96, indirect taxes show an average annual growth of only 10.8 per cent in the post-reform period. Customs, however, are a notoriously fickle revenue source and in any case have to be phased out if the government's own logic of globalisation is to prevail. While the buoyancy in income tax revenues is to be welcomed, for a sustained higher growth of tax revenue, attention must be paid to excises. The finance minister is so pleased with the performance of the income taxes that the sluggishness of excise revenue does not seem to bother him. It is difficult to see why excise revenue should slump in a year that witnessed good growth in industrial production in general and phenomenal growth in particular segments such as passenger cars and all manner of white goods. Securing higher industrial production by encouraging domestic consumption of consumer durables may be compelling micro-economics but is poor macro-economics.