Thai Taxman On The Hunt

[george]

Thai taxman sets his sights on prostitutes and gamblers

The suspicious Ukrainian-registered ship was floating in rough seas in the Gulf of Thailand when 100 heavily armed Thai commandos stormed aboard, some sliding down ropes from helicopters hovering above, the rest from high-speed police boats.

Once in control of the vessel, however, the commandos did not capture al-Qaeda plotters, Tamil Tiger weapon smugglers or even local drug lords. The ship's passengers were simply 100 Thais, indulging in their seemingly insatiable national passion for gambling.

In Thailand, most gambling - except betting at horse races and the government lottery - is illegal. But that does not stop many Thais from courting Lady Luck wherever they can, including in gambling dens, air-conditioned buses fitted with card tables or cruise ships, such as the one raided by the commandos.

Thais gamble an estimated Bt612bn (£8.7bn) a year, both illegally in Thailand and at about 33 legal casinos just beyond the country's borders, one study found.

Illegal gambling is just one component, albeit the biggest, of Thailand's flourishing black economy: a shadow world of casinos, brothels, smuggling and trafficking networks that has operated for decades under the patronage and protection of influential politicians, police and bureaucrats.

Thaksin Shinawatra, the prime minister, and top leaders of his ruling Thai Rak Thai (Thais love Thais) party are now eyeing the vast sums of money being generated underground.

Eager to cash in on these lucrative industries to find more revenue to fund expensive social programmes, Mr Thaksin's government is pushing the idea that some underground activities should be legalised, regulated and taxed.

Pasuk Pongpaichit, a Chulalongkorn University economist who has studied the underground economy, says: "The more you bring into formal arrangements, the easier it is to regulate and tax it. The burden of government is very high."

For Mr Thaksin the potential benefits are compelling. Besides supplementing government coffers, the legalisation and regulation of some underground activities would offer a significant opportunity to distribute patronage while choking the flow of dirty money to corrupt police and weakening potential political rivals.

Mr Thaksin has already proposed a national referendum on whether the government should license so-called Las Vegas style entertainment complexes, which would marry casinos with live shows and restaurants.

Thai society remains deeply divided on the proposal for legalising casinos, which many fear will lead to more gambling, an activity that contravenes fundamental precepts of Buddhism. While no time frame has been set, some officials predict the first legal casinos could open as early as next year.

"It's a huge opportunity for money-making," says one analyst. "If you bring it above board, it opens up the area for legitimate business."

The government is also moving - albeit more cautiously - to test public feeling about legalising prostitution, an industry estimated to involve about 200,000 women. Although commercial sex has long been tolerated, prostitution was banned in 1928 and the women involved remain vulnerable to abuse and to police extortion.

While many accept this ambiguity, the sex business was forced on to the national agenda this year by Chuwit Kamolvisit, the country's self-styled "massage parlour king", and his revelations that he had paid vast sums to police to turn a blind eye to illicit commercial sex in his otherwise licensed bath establishments.

At arecent government seminar, prostitutes and their advocates argued that decriminalising prostitution would reduce women's vulnerability to extortion and stigma. "Women are triply exploited, by police, clients and owners," says Ms Pasuk. "They are not protected by the labour law and cannot bargain."

For now, Mr Thaksin, with his shrewd political instincts, is not expected to push too hard on legalising prostitution, given strong opposition from the Thai middle class. Yet breaking the taboos surrounding gambling could prepare the ground for legalising the sex business, a prospect that some find deeply worrying.

"It is completely wrong," says Virada Somsawasdi, a professor of law and women's studies at Chiang Mai University. "They are looking at it as an economic issue rather than an equality and cultural issue. It is economic greed at the expense of all Thais' social conscience."

--FT