Middle Class May Rebel Against Populist Policies: Thai Opinion

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EDITORIAL

Middle class may rebel against populist policies

By The Nation

The small number of people who actually pay taxes in Thailand are being forced to finance potentially disastrous schemes they don't support

It is now almost certain that the Yingluck government will not make balancing the budget one of its policy priorities, largely because the Pheu Thai Party has to fulfil its campaign promises to supporters. But has the government asked the nation's small number of taxpayers whether they want these massive spending schemes?

Over the past few weeks, news debates have focused on the consequences of the government's populist schemes such as the reduction of the Oil Fund levy and the controversial minimum wage hike. Their political supporters, especially those with low-incomes, will certainly welcome these policies because they will suddenly make these people feel that they have more money in their pockets to spend.

But the consequences for the country will be negative in the long term. After all, these policies will simply add to the government's fiscal burden. Higher public debt could eventually force the government to raise taxes to pay for all these schemes.

It is still not clear exactly how the government will finance these populist schemes. The administration says it will not borrow more money, but it is unlikely to find additional revenue from other sources.

Some of these schemes were drafted hurriedly to persuade people to vote for the Pheu Thai Party. The extensive debate over the pros and cons of these policies shows that the party did not carefully gauge the consequences or even the feasibility of such policy implementation.

The details of these policies are confusing, and Prime Minister Yingluck Shinawatra cannot give clear answers on how they are supposed to be implemented. Pheu Thai for instance promised during the campaign to raise the daily minimum wage nationwide to Bt300. But now the government says the promise actually means something different and it will start only in seven provinces.

The government also pledged to provide a tax deduction for first-time buyers of cars, even though the buyers' target group is those on low incomes who are not subject to paying taxes.

Some taxpayers have been watching the government use their money to finance Pheu Thai Party promises, and they are very sceptical about the government's motives. During several debate forums, people have questioned the necessity and urgency to implement these projects. Their concerns are about whether their money is being well spent or squandered. These views are now being raised far more frequently.

The country's tax revenue is provided by only a small group of people. According to statistics released last year, only 2.3 million people nationwide pay personal income tax to help finance public spending for the country's population of more than 64 million. Some 9 million people file personal income tax returns each year, but the majority are exempt from tax liability as they earn less than Bt20,000 per month.

In the meanwhile, middle-income earners have been squeezed between the rich and poor. Some 60,000 people each year pay taxes in the highest bracket of 37 per cent, which applies for an annual income of more than Bt4 million per year. This group of 60,000 accounts for as much as 50 per cent of total personal income tax collected each year. And a full one-third of income tax collected is paid by just 2,400 people in the country who earn over Bt10 million per year. The richest 20 per cent of the population accounts for 54 per cent of total income, while the poorest 20 per cent accounts for just 4.8 per cent, according to the Finance Ministry.

The Yingluck government's populist policies are unlikely to address this inequality in income figures. But even worse, they could make the gap even wider.

The minimum wage issue is likely to seriously affect small and medium-sized business operators. Business conglomerates with the right connections are more likely to benefit from these massive projects, while the small benefits from the populist schemes are certainly aimed to attract low-income earners.

Worse still, some people are becoming addicted to these government handouts. They have lost the will to take responsibility for their own lives and choose to wait for the help of others. The middle class, most of them law-abiding taxpayers, are being put under greater pressure from these unpredictable policies.

While Yingluck acknowledged the external risk when she first assumed the premiership, her government has so far failed to formulate policies to create jobs and sustain growth. The government has only implemented piecemeal populist policies for short-term benefits.

This small group of taxpayers does not expect a populist windfall to benefit them, but it does expect a decent return for hard work and a productive, fair and conducive environment for their businesses to thrive on. Unfortunately, their voices are being ignored by the government.

-- The Nation 2011-09-07

[angsta]

Who are these small number of people that pay taxes?

[lovenut]

Some people are becoming addicted to government hanouts these words will make uk expats smile.

[Thai at Heart]

Some taxpayers have been watching the government use their money to finance Pheu Thai Party promises, and they are very sceptical about the government's motives. During several debate forums, people have questioned the necessity and urgency to implement these projects. Their concerns are about whether their money is being well spent or squandered. These views are now being raised far more frequently.

Hardly a scientific measurement is it now, particularly if the debate forums include Thaivisa.

So this to quantify it is "some" of "only 2.3 million", and as for 60,000 people paying income tax at the top rate, one can really see where the issues lie. It isn't spending, it is the absolute inability of the tax department to do their job.

[blazes]

If these figures are accurate, it suggests that while the tax system is "fair" in that it makes those who can afford it pay the most, the fact remains that too few people are paying tax.

For a healhy economy and democracy, you need to boost income for the huge numbers of people who are doing what in the West are regarded as middle-class jobs. It is astounding that doctors, dentists, nurses, teachers, policemen earn so little.

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

[Richard4849]

Who are these small number of people that pay taxes?

Everyone who is a salaried worker in any registered business, on the books with an income over a modest threshold.

[DP25]

This government doesn't think the rich should pay taxes and supports lower taxes for big corporations, normal working people who pay income tax have a right to be upset. Everywhere in this country the rich are getting away with not paying. Only 2,400 pay income tax on salaries over 10 million a year, but they sell more than 2,400 luxury cars worth that much every single year. A huge number of rich people aren't paying income tax, and they want to further lower the amount their corporations are paying and are making no effort to regulate the enormous grey economy many are getting their income from entirely tax free.

[Thai at Heart]

If these figures are accurate, it suggests that while the tax system is "fair" in that it makes those who can afford it pay the most, the fact remains that too few people are paying tax.

For a healhy economy and democracy, you need to boost income for the huge numbers of people who are doing what in the West are regarded as middle-class jobs. It is astounding that doctors, dentists, nurses, teachers, policemen earn so little.

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

I would suggest that with the domination of family owned firms/businesses in Thailand, it is extremely easy to hide incomes among family, whilst disproportionately taxing non-family employees. I think they should look at reducing the top rate and enforcing the system better.

[tlansford]

Editorial by the nation

Middle class may rebel against populist policies

Editorial by Tom

"wishful thinking by The Nation"

Actually, it is much worse than wishful thinking. This is the same strategy being used (successfully) in the USA for 40 years. The strategy is basically to convince the middle class that the poor, the people on welfare, the unions, or the (illegal) immigrants are taking advantage of the system in order to deflect attention from the policies being pushed through the government that amount to huge handouts for the rich.

The recent example from the USA, when Warren Buffet, the 2nd wealthiest American, wrote an editorial last month stating that the rich should pay more in taxes, how much, and why, FOX news bizarrely declared it "class warfare" (yeah, that's right, Warren Buffet was engaging in class warfare ) and immediately intensified the attack on the poor calling them the "moocher class" and "freeloaders" whereby the rich were called the "productive class" the "job-creator class"...

Several people have already posted that the rich need to pay their fair share of taxes. Absolutely ! There are several practical ideas, but at the least, the Thais need implement the capital gains tax for the stock market. This is a huge give-away to the people who can afford to pay their fair share.

So this is a "two birds with one stone" for The Nation. It (1) attacks the current government, and (2) makes it look like the fault lies with the poor in Thailand who are going to benefit from new policies, rather than to point out that the wealthy don't carry their weight in society.

[hammered]

Sales taxes are seen as disproportianatly hitting the poor and of course everyone pays VAT when they buy something. There could be problems with collecting VAT from some middle classes businesses but that it is hardly about the poor not paying the tax.

Of course the tax system as a whole needs reforming but then again that goes hand in hand with a lot of other things that Thailand is moving to such as a welfare system.

In the meantime better collection is probably a good idea. The middle classes I know joke about they pay (income) tax but the rich dont.

Unused land taxation, capital gains tax in certain areas where it doesnt exist and inheritance taxation would also seem good ideas. Hopefully Thailand wont go the way of the nuttier places in the west where tax must always be cut and poor totally sodomized as it is their fault they are poor.

[rogerdee123]

Who are these small number of people that pay taxes?

Everyone who is a salaried worker in any registered business, on the books with an income over a modest threshold.

Also all the expats who have work permits. The Thai newspapers used to publish the names of those paying the highest taxes and in those long gone days, a big portion of the names were foreign.

[Thaddeus]

This next statement will be controversial.

How about a form of Poll Tax, if you pay Tax, even a small amount, you get to vote.

[lannarebirth]

"The small number of people who actually pay taxes in Thailand are being forced to finance potentially disastrous schemes they don't support"

Welcome to my world.

[lannarebirth]

This next statement will be controversial.

How about a form of Poll Tax, if you pay Tax, even a small amount, you get to vote.

I understand where you're coming from, but you just can't do things like that. Especially hard in Thailand where voting is about getting paid versus paying money. I think if they had to pay even 10 baht to vote there would be 95% less voters.

[Bagwan]

If these figures are accurate, it suggests that while the tax system is "fair" in that it makes those who can afford it pay the most, the fact remains that too few people are paying tax.

For a healhy economy and democracy, you need to boost income for the huge numbers of people who are doing what in the West are regarded as middle-class jobs. It is astounding that doctors, dentists, nurses, teachers, policemen earn so little.

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

I asked my friendly doctor during one of our frank discussions what in her opinion was the range of incomes for doctors in Thailand. She said that if even a junior doctor was earning less than 40k per month then they were not putting many hours in. A friend recently needed to have a kneecap replaced and was quoted an astronomic price figure. He told the surgeon that he could not afford that much so the doctor said that he would perform the operation at a nearby public hospital at a fraction of the price, but he would need 40K slipped to him under the table.

My dentist charges 500 baht to extract a tooth and the same amount for a scrape and polish. She drives a far more expensive car than I do.

I cannot speak with any authority about nurses but my inclination is that they are not overworked and some lack basic medical knowledge. Come to think of it, that applies to quite a few doctors.

Policemen have their own facility to increase their incomes as most of us well know.

I do not believe that paying those employed in middle class occupations their true market value will solve anything. Corruption starts right at the very top and then filters down. The very rich and powerful do not need bent money to be handed over to them but they demand and expect it anyway.

I note that you have an affiliation with Wrexham F.C. and I understand that they are having serious financial problems. Have you by any chance been advising them?

[tragickingdom]

Did the middle class rebel against the military that was increasing it's budget to an obscene level and were giving the coup takers billion baht bonuses? Did the middle class rebel against the free electricity scheme from Abhisit, the depletion of the disaster fund in the South to buy votes? The answer is no. The middle class will not rebel, the elite will rebel. The elite wants to keep the income gap as wide as possible. They want to use their maid Khadaffi style and they like to go on ordering the mass killing of protestors without impunity. Thailand is still a major rural society. Huge chance that the Bangkok MIddle Class has lots of family members who are poor. They realize that it is cheaper to pay a bit more tax (or even better allow the government to collect more tax from the elite who never paid their fair share and impose capital gain tax which was only imposed on Thaksin by the courts and on no one else) to give their friends and family in the country side a better education and more tools to make a great living. The Middle Class want to rebel against the filthy rich and certain other circles. Newsletters not papers, like the Nation support the wrong people for centuries by misrepresenting the facts.

[AleG]

Did the middle class rebel against the military that was increasing it's budget to an obscene level and were giving the coup takers billion baht bonuses? Did the middle class rebel against the free electricity scheme from Abhisit, the depletion of the disaster fund in the South to buy votes? The answer is no. The middle class will not rebel, the elite will rebel. The elite wants to keep the income gap as wide as possible. They want to use their maid Khadaffi style and they like to go on ordering the mass killing of protestors without impunity. Thailand is still a major rural society. Huge chance that the Bangkok MIddle Class has lots of family members who are poor. They realize that it is cheaper to pay a bit more tax (or even better allow the government to collect more tax from the elite who never paid their fair share and impose capital gain tax which was only imposed on Thaksin by the courts and on no one else) to give their friends and family in the country side a better education and more tools to make a great living. The Middle Class want to rebel against the filthy rich and certain other circles. Newsletters not papers, like the Nation support the wrong people for centuries by misrepresenting the facts.

Could you substantiate your allegations?

[blazes]

If these figures are accurate, it suggests that while the tax system is "fair" in that it makes those who can afford it pay the most, the fact remains that too few people are paying tax.

For a healhy economy and democracy, you need to boost income for the huge numbers of people who are doing what in the West are regarded as middle-class jobs. It is astounding that doctors, dentists, nurses, teachers, policemen earn so little.

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

I asked my friendly doctor during one of our frank discussions what in her opinion was the range of incomes for doctors in Thailand. She said that if even a junior doctor was earning less than 40k per month then they were not putting many hours in. A friend recently needed to have a kneecap replaced and was quoted an astronomic price figure. He told the surgeon that he could not afford that much so the doctor said that he would perform the operation at a nearby public hospital at a fraction of the price, but he would need 40K slipped to him under the table.

My dentist charges 500 baht to extract a tooth and the same amount for a scrape and polish. She drives a far more expensive car than I do.

I cannot speak with any authority about nurses but my inclination is that they are not overworked and some lack basic medical knowledge. Come to think of it, that applies to quite a few doctors.

Policemen have their own facility to increase their incomes as most of us well know.

I do not believe that paying those employed in middle class occupations their true market value will solve anything. Corruption starts right at the very top and then filters down. The very rich and powerful do not need bent money to be handed over to them but they demand and expect it anyway.

I note that you have an affiliation with Wrexham F.C. and I understand that they are having serious financial problems. Have you by any chance been advising them?

Don't know what circles you wander around in, my friend, but even 40 k for a new knee is pretty cheap, is it not (for us farangs, I mean)?

The dental fees you quote are precisely what I pay, and I consider myself to have had a bargain at that price for either an extraction or a cleaning.

I have several friends who are either teachers or nurses. I can vouch for the medical knowledge of those I myself know, ditto the doctors I have consulted.

If you wander in to the Ram hospital in CM, you will, unlike in my homeland, see a specialist in under an hour, and you will pay no more than 300 baht. Ok, if she sees five patients an hour, she may end up with an extra income of maybe 25-35k per month, but still, 300 is dirt cheap for us as patients.

In other words, the doctor really has to put in the hours to gain a "middle class" income.

When I win the lottery, I will gladly give Wrexham FC my advice and access to my wallet.

[Hyponeros]

so 2.5 million people in Thailand out of 65 million are unhappy because they don't benefit from those policies? Do they rebel because they earn much more money than the rest? So what? organize a new coup to make 3.8% of the population happy? Is that Thai style democracy?

[MengWan]

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

I disagree with that ...

Corruption is a state of mind, and it is NOT associated with the income level !

Here, the richest are the most corrupt, mafia-style ...

[scorecard]

Who are these small number of people that pay taxes?

Everyone who is a salaried worker in any registered business, on the books with an income over a modest threshold.

But the reality is that the number of people in regular employment who are under the threshold income is enormous, and it includes a very large % or farmers, plus of course employment which is not documented, which again is large and both employee and employer are not paying various taxes.

[sfbandung]

The Nation is basically a partisan rag? I'm finding their editorial fairly one track.

Populist policies are popular, hence they get people elected. Whilst the article is hard to follow and contradictory, the gist I'm getting is that it will piss off somewhere between 2,400 and 60,000 people.

I'm sure they're shaking in their boots at the miniscule electoral ramifications. Apart from the fact that almost every elected government on earth make outrageous promises to get elected. Then they break them. This at least is one area where Thailand is exactly the same as developed nations like Australia, the US, UK, Europe etc etc etc.

Oh my Buddha! The politicians have been lying again!!

Edited September 7, 2011 by sfbandung

[Richard4849]

Who are these small number of people that pay taxes?

Everyone who is a salaried worker in any registered business, on the books with an income over a modest threshold.

Also all the expats who have work permits. The Thai newspapers used to publish the names of those paying the highest taxes and in those long gone days, a big portion of the names were foreign.

Many of the expats I know minimize their exposure to Thai taxes by taking the minimum believable salary onshore, with the rest paid into offshore accounts. Extremely common.

[kerryk]

If these figures are accurate, it suggests that while the tax system is "fair" in that it makes those who can afford it pay the most, the fact remains that too few people are paying tax.

For a healhy economy and democracy, you need to boost income for the huge numbers of people who are doing what in the West are regarded as middle-class jobs. It is astounding that doctors, dentists, nurses, teachers, policemen earn so little.

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

Not disagreeing with you but wondered if you could name a couple of healthy democracies so I will know what one looks like.

[Crushdepth]

In the meantime better collection is probably a good idea. The middle classes I know joke about they pay (income) tax but the rich dont.

That's a global phenomenon!

[tlansford]

The Nation is basically a partisan rag? I'm finding their editorial fairly one track.

Populist policies are popular, hence they get people elected. Whilst the article is hard to follow and contradictory, the gist I'm getting is that it will piss off somewhere between 2,400 and 60,000 people.

I'm sure they're shaking in their boots at the miniscule electoral ramifications. Apart from the fact that almost every elected government on earth make outrageous promises to get elected. Then they break them. This at least is one area where Thailand is exactly the same as developed nations like Australia, the US, UK, Europe etc etc etc.

Oh my Buddha! The politicians have been lying again!!

Partisan, ... yes. Even the "news" is fairly one track.

[blazes]

If these figures are accurate, it suggests that while the tax system is "fair" in that it makes those who can afford it pay the most, the fact remains that too few people are paying tax.

For a healhy economy and democracy, you need to boost income for the huge numbers of people who are doing what in the West are regarded as middle-class jobs. It is astounding that doctors, dentists, nurses, teachers, policemen earn so little.

When these people earn middle class incomes to match their middle class jobs, then Thailand will begin to become a healthy democracy where no one needs to accept or expect bribes.

Not disagreeing with you but wondered if you could name a couple of healthy democracies so I will know what one looks like.

Good question, and maybe the word "healthy" needs to be excised, since that needs to be defined and can't.

But at the very least, a healthy democracy (or rather, a place where there is at least a lip-service dedication to "equality" or 'fairness" or some such concept) would have you slapped in jail in no time if you attempted to bribe the police officer who has just stopped you for speeding.

Unfortunately, there are too many examples of the people at the top being utterly corrupt....for ex, Tony Bliar [sic] and his Weapons of Mass Destruction or Jacques Chirac, former president of France and former Mayor of Paris, who right this moment is pleading a French form of Alzheimer's to avoid appearing in court to answer charges of corruption.

Going on, one could draw attention to all the bankers in New York and London (not to mention Frankfurt, Paris etc) who made millions in bonuses from their corrupt transactions in the sub-prime mortgage affair.

Should I mention the appalling corruption in the highest reaches of FIFA?

Alas, Thailand does not have too many national role models to aspire to......but "health" is something, surely, we should all work for, whether personally or nationally or internationally.

[lannarebirth]

Did the middle class rebel against the military that was increasing it's budget to an obscene level and were giving the coup takers billion baht bonuses? Did the middle class rebel against the free electricity scheme from Abhisit, the depletion of the disaster fund in the South to buy votes? The answer is no. The middle class will not rebel, the elite will rebel. The elite wants to keep the income gap as wide as possible. They want to use their maid Khadaffi style and they like to go on ordering the mass killing of protestors without impunity. Thailand is still a major rural society. Huge chance that the Bangkok MIddle Class has lots of family members who are poor. They realize that it is cheaper to pay a bit more tax (or even better allow the government to collect more tax from the elite who never paid their fair share and impose capital gain tax which was only imposed on Thaksin by the courts and on no one else) to give their friends and family in the country side a better education and more tools to make a great living. The Middle Class want to rebel against the filthy rich and certain other circles. Newsletters not papers, like the Nation support the wrong people for centuries by misrepresenting the facts.

Did you notice that the few populist policies tha Abhisit had gave people breaks from the government. Almost all of the handout policies Thaksin has benefit corporations. Funny, huh?

[hammered]

The Nation is basically a partisan rag? I'm finding their editorial fairly one track.

Populist policies are popular, hence they get people elected. Whilst the article is hard to follow and contradictory, the gist I'm getting is that it will piss off somewhere between 2,400 and 60,000 people.

I'm sure they're shaking in their boots at the miniscule electoral ramifications. Apart from the fact that almost every elected government on earth make outrageous promises to get elected. Then they break them. This at least is one area where Thailand is exactly the same as developed nations like Australia, the US, UK, Europe etc etc etc.

Oh my Buddha! The politicians have been lying again!!

Please get it right. That nice Mr Abhisit and his angelic party of Democrats never lie, never do anything wrong, and run the country in the most fair and impartial way imaginable to the educated well heeled (and only they count as everyone else is a moron who shouldnt be allowed a vote) and would never dream of supporting anything that might be against the interests of the people and only lose elections because that devious square faced man splashes the cash and all the intellectually challenged who shouldnt have a vote have been totally brain washed by legions of red shirted hypnotic genii with cloaks of invisibility so all those nicey nicey isoc men who only want to ensure the best for the people cant actually see them and protect the people of limited intelligence from being exposed to their wicked ways

[hammered]

Did the middle class rebel against the military that was increasing it's budget to an obscene level and were giving the coup takers billion baht bonuses? Did the middle class rebel against the free electricity scheme from Abhisit, the depletion of the disaster fund in the South to buy votes? The answer is no. The middle class will not rebel, the elite will rebel. The elite wants to keep the income gap as wide as possible. They want to use their maid Khadaffi style and they like to go on ordering the mass killing of protestors without impunity. Thailand is still a major rural society. Huge chance that the Bangkok MIddle Class has lots of family members who are poor. They realize that it is cheaper to pay a bit more tax (or even better allow the government to collect more tax from the elite who never paid their fair share and impose capital gain tax which was only imposed on Thaksin by the courts and on no one else) to give their friends and family in the country side a better education and more tools to make a great living. The Middle Class want to rebel against the filthy rich and certain other circles. Newsletters not papers, like the Nation support the wrong people for centuries by misrepresenting the facts.

I have to say most of the middle classes I know especially the more entrepreneurial and those working industry actually have a lot of sympathy with the reds and do indeed have family scattered around the rural areas as you point out. It wasnt always that way but the April/May thing and what followed it seems to have made a profound difference. The people I know who tend to support all things yellow and go into one if you mention Thaksin tend to be government officials and teachers and lecturers.

Openly criticising Thaksin these days is easy and carries little sanction, but openly criticising the military say is something many wont do publically and can cause you big headaches, but in private I find most middle class people are quite willing to criticize the rich and their gaming of systems