Thailand imposes 'luxury tax'

Everything from karaoke bars to massage parlours and cinemas will have to pay a new tax which could be as much as 20%.

Telecoms companies will also have to pay an excise tax which could be up to 50%.

The BBC's Larry Jagan in Bangkok said the tax would be imposed on entertainment, gambling or anything which affected the environment.

It is a new cost on top of those already paid by such companies, but there has yet to be any public outcry even though the amount will be passed on to the consumer.

"This is something of a luxury tax - the government is introducing it as a revenue raising measure," he told the BBC's World Business Report.

"It is not an attempt to limit the number of clients who go to massage parlours or nightclubs," he said.

Transparency

The higher duty on telecoms is more significant however.

It is changing the system whereby telecoms companies shared a percentage of their profits with public utilities into a tax system.

"The government says this is introducing transparency into the telecoms industry," Larry Jagan said.

It also said it was making the move to enable it to comply with World Trade Organisation rules.

But Mr Jagan said the move could be bad news for two major utility firms who are likely to see their profitability severely hit.

The two firms were due to be privatised but this could now be extremely difficult to achieve.