EDITORIAL

Start the debate on an equitable taxation system

The Nation

Thailand needs to address the issues of tax avoidance and each individual's moral obligation to contribute to national development

BANGKOK: -- US President Barack Obama said recently during a televised interview that he could foresee a budget deal in Congress that did not include further increases in tax rates but which focused on eliminating loopholes and opportunities to get deductions.

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Raising taxes may not be an issue right now, he said. Closing the loopholes in tax collection would be more effective in ensuring justice in the tax collection system.

Obama was quoted as saying, "Can we close some loopholes and deductions that folks who are well connected and have a lot of accountants and lawyers can take advantage of so they end up paying lower rates than a bus driver or a cop?"

The US administration has recently raised taxes on earnings of more than $450,000 a year in a bid to reduce the country's massive budget deficit and make tax collection fairer for the public.

There is also a debate in Thailand over the unfavourable tax regime, which creates opportunities for abuse. However, the government has not seriously addressed this issue.

The government should have done better in raising public awareness on tax abuse. Thailand has seen high-profile cases involving tax avoidance and abuse. These include the probe into the Bt73.3-billion sale of Shin Corp shares. Last year actress Chermarn "Ploy" Boonyasak failed to evoke public sympathy after reportedly using a proxy to help reduce the amount of tax she was levied.

Certain tax-avoidance practices are legal, such as the exemption from capital gains tax on proceeds from selling shares via the Stock Exchange of Thailand. But in many cases there are loopholes and grey areas in the law that anyone wishing to avoid paying their dues quickly exploits.

There's often a thin line between tax avoidance and tax evasion. What President Obama seemed to suggest is that the wealthy are more likely to be assisted by legal experts who show them how to exploit the loopholes. High-income earners will naturally be subject to higher tax under a progressive tax system, while low- and middle-income earners receive no such assistance and therefore have to pay their taxes in full.

The wealthy might be able to legally avoid paying full taxes by following clever advice, but some cases involve dishonesty and fraud. In the worst cases, tax avoidance and abuse is linked to the underground economy. People involved in the shadow economy are naturally disinclined to disclose their income or its source. Activities in the shadow economy can include the illegal production of goods or provision of services that are deliberately concealed from the authorities to avoid full payment of tax or social security contributions, or to avoid meeting certain requirements such as labour and environmental standards.

Unfortunately, while other countries such as the US have placed tax issues high on their national agenda - as evidenced by the heated debate on tax payment that took place during the US presidential election - Thais in general don't feel as strongly about tax issues as people in those countries.

Nevertheless, all citizens should be instilled with an awareness that they have a moral obligation to pay tax to contribute to national development and the advancement of social justice. The reputation of lawyers should not be measured by the amount of money they can save for their clients through tax avoidance and evasion. News of celebrities or politicians avoiding tax should not be allowed to fade from the memory without any social sanction or without serious public discussion taking place on the subject.

After all, it is not so much the written text of the law that matters, but the intent with which it is regarded, and the public's awareness of moral obligation that makes the law sacrosanct.

-- The Nation 2013-02-06

If all taxes were abolished in favour of a flat income tax, even at 3%, the country would thrive. Companies who earn billions and pay little or no tax compared to PAYE people is criminal. But excise tax, income tax, sales tax, VAT, withholding tax - it is completely insane. Tax on receipt of funds thru the banks and payment monthly and the coffers would fill in no time. I am sure if the greater unwashed voting public were told their tax rate would be 3% I would guess I could get my political 'party' into power. Sure it would create an underground cash economy but that would pale into insignificance by comparison to taxes paid.

Gas taxes pay for roads, local taxes pay for education, and corporate tax pays for the military. The government of america operated just fine for its first 200 years WITHOUT an income tax. Then later the income tax was needed to support the brilliant idea of government taking loans from the private Federal Reserve that can print money out of thin air and then charge our government billions in interest on the money when our government has Constitutional Authority to tender its own money interest free.

Who prints the money in thailand and at what cost to the gov , and then the people.

If the PTP actually did something about corruption, massive amounts of taxpayers money would not go missing......

They could probably cut tax if they did that!

If all taxes were abolished in favour of a flat income tax, even at 3%, the country would thrive. Companies who earn billions and pay little or no tax compared to PAYE people is criminal. But excise tax, income tax, sales tax, VAT, withholding tax - it is completely insane. Tax on receipt of funds thru the banks and payment monthly and the coffers would fill in no time. I am sure if the greater unwashed voting public were told their tax rate would be 3% I would guess I could get my political 'party' into power. Sure it would create an underground cash economy but that would pale into insignificance by comparison to taxes paid.

The problem isn't about the taxes. It's the deductions and exclusion clauses that are the problem. A flat income tax won't solve the problem when the richest people (and companies) don't make any income.

The different taxes are based around a user pays system, which is generally the right way to do it. A consumption tax (VAT) gets the taxes from the people that spend it, which is a fair way to do it.

There is no right answer for taxes, but the simpler it is, the easier it is to report, collect and enforce. Cut out the loopholes and it will be fairer.

If all taxes were abolished in favour of a flat income tax, even at 3%, the country would thrive. Companies who earn billions and pay little or no tax compared to PAYE people is criminal. But excise tax, income tax, sales tax, VAT, withholding tax - it is completely insane. Tax on receipt of funds thru the banks and payment monthly and the coffers would fill in no time. I am sure if the greater unwashed voting public were told their tax rate would be 3% I would guess I could get my political 'party' into power. Sure it would create an underground cash economy but that would pale into insignificance by comparison to taxes paid.

please give us some checkable details.

BTW, I never read about the tax on the "hard" earned money in bribary-, corruption-, kickback-, tea-money, (you name it)-cases. Somebody else?

I don't know, but I guess there is no real interest to tax it. Remember, up to 30 % of the big projects are "reserved for good connections". A giant amount probably not taxed?

Edited February 6, 201313 yr by puck2

Thai people pay taxes?

Strange story, the writer starts out complaining about the tax laws and how they need new tax laws, then goes on to complain about people who break the tax laws through dishonesty and fraud. If people are prepared to break the law now, then changing the tax laws probably won't make them suddenly follow the new laws. How about start by enforcing the laws and prosecuting a few of these rich people before changing the current laws.

Edited February 6, 201313 yr by Time Traveller

And if anyone in Thailand would be taxed, it would have a lot of frauders as in Greece ! Hide money, don't do bills for restaurants and cheating on income !

Land tax, cough, ahem, ahem.......

UK income tax was first raised to raise money to fight the Napoleanic Wars... You could say that its become an illegal tax as its no longer used in its original intention. because the UK doesnt have a written constitution gives nobody any rights to contest it..... Im quite happy to be proved wrong but thats how I read it up some years back

Do not use the american tax system and Obama"s plan as a example, the USA economy is in the toilet, unemployment is going thru the roof, small business are failing at a record rate, and no end in sight. I came here for more economic and personal freedom. The place to look at is Singapore. there economy is very strong and growing, the only downside is they have to trade with the quasi socialist country's who's economy's are tanking, and that puts a drag on there economy.

UK income tax was first raised to raise money to fight the Napoleanic Wars... You could say that its become an illegal tax as its no longer used in its original intention. because the UK doesnt have a written constitution gives nobody any rights to contest it..... Im quite happy to be proved wrong but thats how I read it up some years back

Wars cost a lot of money as the usa and others are finding out.

It's even more galling when the reasons to go to war are fabricated, i.e. iraq

UK income tax was first raised to raise money to fight the Napoleanic Wars... You could say that its become an illegal tax as its no longer used in its original intention. because the UK doesnt have a written constitution gives nobody any rights to contest it..... Im quite happy to be proved wrong but thats how I read it up some years back

Wars cost a lot of money as the usa and others are finding out.

It's even more galling when the reasons to go to war are fabricated, i.e. iraq

yes. your so right..... saddam had other ME states considering dumping the $ in favour of the euro....for the Petro dollar this was disaster for the US....so much for the WMD bullshxt