Thailand Advocates Innovative Tax Strategy for Low-Income Earners

[snoop1130]

 

Finance Secondary Secretary Lavaron Sangsnit supports a bold negative income tax (NIT) scheme that provides financial support or welfare payments to workers whose earnings fall below a specified level. This initiative, popularly known as "workfare," is designed to encourage employment while providing essential monetary aid.

 

Lavaron asserts that the NIT system encourages people to remain in their jobs by ensuring state welfare payments if their earnings don’t meet the minimum requirement. He says, for those earning less than the set minimum, the government will top up their wage to meet the threshold.

 

For those out of work, the state might provide some help, but it won't be as substantial as the aid granted to those who have jobs, according to Lavaron. He made it clear that this concept is not about simple welfare but workfare, implying recipients need to work to get increased government benefits.

 

Lavaron believes that introducing the NIT scheme could cut state welfare costs and remove overlapping in the current welfare system, which includes about 20 plans such as the state welfare card, costing up to 50 billion baht per year.

 

 

 

 

To be eligible for workfare, individuals would have to submit their yearly personal income tax forms to the Revenue Department to confirm their income eligibility. As a person's income increases, the state would provide extra support in a stage known as "phase in." Once someone's earnings reach a certain mark, the state support rate becomes stable. If the income exceeds the minimum limit, the government stops its support.

 

The NIT concept was first suggested by the Fiscal Policy Office ten years ago. Unlike classic welfare, where people might get state benefits without working, NIT requires participants to work and be part of the tax system.

 

Lavaron pointed out that the government's spending on hard-to-reduce items has been constantly growing. In fiscal 2023, these expenses totalled 2.13 trillion baht, making up 67.2% of the government's budget, rising from 65.8% in fiscal 2022. This increase is the result of spending on debt repayment, commitments, and increasing welfare costs for public personnel and senior citizens. The proportion of spending on wages, contributions, and compensation for public workers dropped slightly from 26.2% of the budget in fiscal 2022 to 25.7% in 2023.

 

File photo for reference only

 

-- 2024-09-09
 

 

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[hotchilli]

11 hours ago, snoop1130 said:

Lavaron asserts that the NIT system encourages people to remain in their jobs by ensuring state welfare payments if their earnings don’t meet the minimum requirement. He says, for those earning less than the set minimum, the government will top up their wage to meet the threshold

Why are they earning less than the set minimum, while being "employed"

 

[watchcat]

26 minutes ago, hotchilli said:

Why are they earning less than the set minimum, while being "employed"

 

 

Cheap Charlie business owners?

[bkk6060]

20 minutes ago, watchcat said:

 

Cheap Charlie business owners?

Yes, probaably mostly Chinese and Russian.

[hotchilli]

33 minutes ago, watchcat said:

 

Cheap Charlie business owners?

Is the labour ministry an extension of the inactive post department?

[Srikcir]

12 hours ago, snoop1130 said:

negative income tax (NIT) scheme that provides financial support or welfare payments to workers whose earnings fall below a specified level. This initiative, popularly known as "workfare," is designed to encourage employment while providing essential monetary aid.

This is a very viable system.

It seems similar in goal to the popular US earned income tax credit system  - a refundable tax credit for low- to moderate-income individuals that can reduce their tax bill or result in a refund if the qualifications are met. There is no credit for not working.

However, I believe the Thailand NIT scheme would be more manageable with less bureaucratic involvement.

[zyphodb]

I can just see all those poor Thais rushing to get tax registered, not...