'Cut in tax rate is not meant to help the rich'

[Lite Beer]

'Cut in tax rate is not meant to help the rich'
The Sunday Nation

BANGKOK: -- The Finance Ministry anticipates that its plans to restructure the income tax rate will reduce government revenue by Bt27 billion a year. However, the move is also expected to stimulate spending and boost value-added tax by up to Bt10 billion per annum.

In the government's weekly television programme, Deputy Finance Minister Benja Louicharoen said the benefits would result in a higher standard of living for all taxpayers.

She said the top income tax bracket for earners would be lowered from 37 per cent to 35 per cent - still considered the highest in Asean.

It would put Thailand on par with Vietnam, she added. The lower tax rate would encourage an influx of professionals, who are more interested in the top tax rate, than tax deductions. The Kingdom now offers about 10 tax deductions, which reduce taxes by as much as Bt1.5 million a year.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy. He said that while those subject to the maximum rate appeared to benefit from the change, in percentage terms their benefit was lower than those subject to the 10 per cent tax bracket.

"The old rate has been in use for over 20 years. This change reflects our plan to restructure the tax rate - rather than to offer more deductions," he said, adding that it was part of a strategy to streamline taxes.

The new income tax rate follows a recent cut in corporate taxes

-- The Nation 2013-11-24

[coobah666]

The Rich get Richer

The Poor get the Picture

[JRSoul]

"Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy."

Just like the amnesty was not meant to benefit Thaksin. That it will is undeniable, as did the corporate tax cut, one of this government's first moves.

But wait; isn't the government short of revenue, seeking multi-trillion baht loans and talking about increasing the VAT rate, a move which will have the greatest effect on low income earners? Strange then to reduce income by B27 billion to increase it by a claimed B10 billion, perhaps the extra 1% will make up the other B17 billion.

Edited November 24, 2013 by JRSoul

[Robby nz]

But there will be benefits from this.

Even though Govt revenue drops by 27 billion VAT is expected to rise by 10 billion that's, Oh hang on............................

Back to the drawing board

[Thainy Tim]

So hand out tax cuts to the rich and spread the losses by increasing VAT that affects the whole country. So basically the 98% of the populous are going to cover the 2% tax cut for the 2% rich elite.

Kinda flies in the face of.......

'Cut in tax rate is not meant to help the rich'

[Tatsujin]

Mathematics and critical analysis is not one of the Thai's strong points, is it . . . ? Actually, thinking at all seems to be somewhat lacking also.

[Crushdepth]

Let me guess, the rich will rush out and spend these new taxes savings, which will trickle down to the poor thereby improving their well-being?

[smutcakes]

"Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy."

Just like the amnesty was not meant to benefit Thaksin. That it will is undeniable, as did the corporate tax cut, one of this government's first moves.

But wait; isn't the government short of revenue, seeking multi-trillion baht loans and talking about increasing the VAT rate, a move which will have the greatest effect on low income earners? Strange then to reduce income by B27 billion to increase it by a claimed B10 billion, perhaps the extra 1% will make up the other B17 billion.

You really need to learn more about tax, and the likely outcomes of increasing/decreasing the various taxes in society! You really think its as simple as increase the upper tax limit bracket from say 40 to 50% will suddenly increase revenue from tax? What has the 2 trillion loan got to do with tax???? What are you talking about, I could be the richest man in the world but take a loan to buy a new house as it makes financial sense to do so. You appear to have no clue about finance/tax etc Just because someone takes a loan, does not mean they cannot afford to pay it themselves if they wanted to. Why would i spend my own money which is invested in shares getting 6%, when i can borrow from a bank to buy it at 3%??

[Crushdepth]

You really need to learn more about tax, and the likely outcomes of increasing/decreasing the various taxes in society! You really think its as simple as increase the upper tax limit bracket from say 40 to 50% will suddenly increase revenue from tax? What has the 2 trillion loan got to do with tax???? What are you talking about, I could be the richest man in the world but take a loan to buy a new house as it makes financial sense to do so. You appear to have no clue about finance/tax etc Just because someone takes a loan, does not mean they cannot afford to pay it themselves if they wanted to. Why would i spend my own money which is invested in shares getting 6%, when i can borrow from a bank to buy it at 3%??

Or get the taxpayer to borrow it for you, and then steal it.

[waza]

'Cut in tax rate is not meant to help the rich'

And yet is does. Why would any government give the rich 27 billion in tax cut and justify it by saying we will make 10 billion from it? That's a net loss of 17 billion baht.

"The Finance Ministry anticipates that its plans to restructure the income tax rate will reduce government revenue by Bt27 billion a year. However, the move is also expected to stimulate spending and boost value-added tax by up to Bt10 billion per annum."

[richard_smith237]

So hand out tax cuts to the rich and spread the losses by increasing VAT that affects the whole country. So basically the 98% of the populous are going to cover the 2% tax cut for the 2% rich elite.

Kinda flies in the face of.......

'Cut in tax rate is not meant to help the rich'

Everybody seems to be criticising the wealthy, for what exactly ?

As a percentage the restructuring helps the poor and middle income earners more than the rich... Or perhaps some think that only the rich should pay tax - where then is their incentive to progress ?

No tax is payable for those earning up to 20,000 Baht per month.

The Tax rate has been cut by 50% for those earning from 20-30,000 Baht per month.

The Tax rate has been cut by 15.18% for those earning from 80-100,000 Baht per month, and so on...(as the chart below shows).

Thus: as a percentage while the rich are paying 5.86% less tax under tax restructure, in terms of percentage the less wealthy are saving more.

The shortfall seems daft though - but perhaps the cuts could stimulate a greater degree of payment.

Enforcement of tax payment would go a long way to cover the deficit under the new structuring.

[Bluespunk]

"'Cut in tax rate is not meant to help the rich'"

Then don't cut their tax rate. Cut that paid by lower income groups. Reduce VAT on staples relied upon by those in lower income brackets.

[yooper2001]

The Republican party has been spewing this garbage for years in USA and it does not work. The republicans believe in giving the money to the rich and then the rich will invest the money and create jobs. ( trickle down theory )

The democrats believe to give more money to the poor and they spend the money therefore creating a demand for products, therefore creating a demand.

In America the top 400 wealthiest have more money then all the rest put together. The tax break for the rich does not work. This is said by Bill Gates and Warren Buffett'

incentives for creating jobs does work.

Take the money and spend it on infrastructure and education instead

[worgeordie]

They must be using the same calculators that they use for

accessing the loses on the rice fiasco ,the ones that say

2+2 =3 .

All politicians are rich ,most have companies or at least sit

on the boards ,or have large shareholdings in Thai companies,

so no surprise they have voted to lower Corporation tax,and

now tax reductions for the higher rate ,they sure are taking

care of themselves,while once again its the poor and the

country that bare the costs.

regards Worgeordie

[Thai at Heart]

So hand out tax cuts to the rich and spread the losses by increasing VAT that affects the whole country. So basically the 98% of the populous are going to cover the 2% tax cut for the 2% rich elite.

Kinda flies in the face of.......

'Cut in tax rate is not meant to help the rich'

Everybody seems to be criticising the wealthy, for what exactly ?

As a percentage the restructuring helps the poor and middle income earners more than the rich... Or perhaps some think that only the rich should pay tax - where then is their incentive to progress ?

No tax is payable for those earning up to 20,000 Baht per month.

The Tax rate has been cut by 50% for those earning from 20-30,000 Baht per month.

The Tax rate has been cut by 15.18% for those earning from 80-100,000 Baht per month, and so on...(as the chart below shows).

Thus: as a percentage while the rich are paying 5.86% less tax under tax restructure, in terms of percentage the less wealthy are saving more.

The shortfall seems daft though - but perhaps the cuts could stimulate a greater degree of payment.

Enforcement of tax payment would go a long way to cover the deficit under the new structuring.

They will have to put up VAT, which makes an awful lot of sense because very very few company owners or small businesses declare the salaries given to the owners properly, and apparently virtually no one in the whole country earns 250k per month, despite apparently thousands of people being able to have lifestyles akin to it.

Thus, taxing expenditure through exice and VAT makes a hell of a lot more sense than expecting the Thai population to voluntarily starting to pay their income taxes.

[givenall]

"Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy."

Just like the amnesty was not meant to benefit Thaksin. That it will is undeniable, as did the corporate tax cut, one of this government's first moves.

But wait; isn't the government short of revenue, seeking multi-trillion baht loans and talking about increasing the VAT rate, a move which will have the greatest effect on low income earners? Strange then to reduce income by B27 billion to increase it by a claimed B10 billion, perhaps the extra 1% will make up the other B17 billion.

time is running out for this regime to raid the treasury, so any way they can speed up the raid they will do

[JRSoul]

"Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy."

Just like the amnesty was not meant to benefit Thaksin. That it will is undeniable, as did the corporate tax cut, one of this government's first moves.

But wait; isn't the government short of revenue, seeking multi-trillion baht loans and talking about increasing the VAT rate, a move which will have the greatest effect on low income earners? Strange then to reduce income by B27 billion to increase it by a claimed B10 billion, perhaps the extra 1% will make up the other B17 billion.

You really need to learn more about tax, and the likely outcomes of increasing/decreasing the various taxes in society! You really think its as simple as increase the upper tax limit bracket from say 40 to 50% will suddenly increase revenue from tax? What has the 2 trillion loan got to do with tax???? What are you talking about, I could be the richest man in the world but take a loan to buy a new house as it makes financial sense to do so. You appear to have no clue about finance/tax etc Just because someone takes a loan, does not mean they cannot afford to pay it themselves if they wanted to. Why would i spend my own money which is invested in shares getting 6%, when i can borrow from a bank to buy it at 3%??

Actually, I think I may know much more about tax than you do. Here we have a government having cut the corporate tax, proposing to cut the progressive income taxes of the rich, increasing alcohol excise, and at the same time indicating they will raise the flat tax VAT. Flat taxes have a much greater impact on the lowest income earners; they are being increased while the taxes on the wealthy are reduced. In fact, the VAT and excise are the ONLY tax most Thais pay.

At the same time, the same government appears to have a cash flow problem, unable to meet their commitments to the rice farmers and proposing to borrow because they don't have sufficient income to finance their infrastructure proposals from budget.

I don't give a rat's about your personal finances, but if you are aware of this government having investments returning more than their loan interest rates, I wish you would share them.

[moe666]

Just turn it all over to SC and he will paint it red and it will be ok, everybody will have a full rice bowl.

[Ricardo]

This seems a very strange time, when the government is passing legislation to borrow 100% of the cost of the rice-scheme & flood-control-measures & long-term infrastructure-investment, for the government to deliberately reduce its own tax-income ? It appears very odd indeed !

No doubt a reassuring statement, and a more-convincing fairy-tale explanation, will be forthcoming shortly.

[Bluespunk]

"Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy. He said that while those subject to the maximum rate appeared to benefit from the change, in percentage terms their benefit was lower than those subject to the 10 per cent tax bracket."

Deary, deary me, those little white lies just keep piling up.

[bigbamboo]

I'm still trying to work out if the big knobs (and I use that word advisedly) at the Finance Ministry are dishonest or just thick.

Maybe a lot of both.

[yourauntbob]

Many of the points above are valid on both sides, some are not.

The government is struggling to pay its bills and needs to stop raiding the government coffers. They should be looking at restructuring government spending and reducing the amount of money that go into political pockets on just about everything the government buys. They waste money on just about everything, and the government before this one was no better. Fundamental change is needed but will probably not come.

As far as the tax situation goes, its good to see them making changes. What I dont see anyone mention above is the fact that ASEAN will soon be here. Thailand has some advantages in the infrastructure department but will need to compete will all other ASEAN countries for multinational businesses that are looking to build factories, hubs (of all varieties), logisitics facilities, and of course workers. Creating a more favorable tax code would bring in more revenue by luring away businesses from the likes of Vietnam, Malaysia, Singapore, and the fast growing Indonesia. Taxes will not be the only concern, but you would be kidding yourself if you didnt believe it would be a primary concern once goods and services can cross the boarders between these nations almost restriction free. Compared to much of the world and SEA in general, 35% is still a high figure. Now they need to figure out how to actually collect it in a country where cash is the primary method of payment and under the table is a way of life.

[Jameskrabi]

So what does this mean for someone paid 120.000 b per month + annual 120.000 baht bonus in Thailand ? Excl offshore payments (international company) will this person be better off? And by how much per month?

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[PhilipCook]

The tax cut has the biggest benefit(% net after tax) for the "grass roots" voter base. Sure, the higher income taxpayers get some additional cash back but its a much smaller %. Based on comments posted, either many of you woke up cranky or you don't pay Thai income taxes or both. The tax reduction is good regardless of the government's intent because they are letting us keep more of our earnings.

[siampolee]

At the end of the day the greater majority of the less well off Thai's will be paying more than their fair share of the tax burden via V.A.T. It won't matter whether you are a farm worker in Surin or an ofice manager in Bangkok.

Both of those people will be picking up the bill for the well to do who are the only ones gaining from these (un)economic taxation measures.

You have an income of 50,000 baht a month your purchasing power is little affected by the V.A.T. rates, however, poor old Somchai eking out an existence on around 10,000 baht a month gains sweet nothing just a few more headaches and a few more things to do without.

However the company director, senior manager, executive types on 100,000 + baht a month can travel abroad and spend their money outside of the country thanks to this oh so generous puppet administration.

In short it is a classic policy of complete financial idiocy

The new income tax rate follows a recent cut in corporate taxes

So clearly shown above is the farcical policy that the Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong is following.

A total pack of white lies espoused by a proven delusional, professional, creative romantic speaker, the cost of which will be falling on the most vulnerable of the wage earning sector here in P.T.P. Plunderland.

Edited November 24, 2013 by siampolee

[rayw]

What crap. Dropping the top earnings related tax rate only is of course pandering to the high paid and wealthy. A proper peoples' Government, as this lot pretend to be, would increase the TAX THRESHOLD where low paid are taken out of such tax entirely, and also low paid would then pay a considerably less proportion of their gross income in such earning related tax. IF they really wanted to help the ordinary and poor Thai folk, they should also bring in a new super top rate of tax (say 50% or higher), applied just to those that are over paying themselves and thus taking more out of the Thai economy leaving less for the ordinary people. Excess tax recovered form the fat cats could be used to truly help the painfully poor folk in many areas of Thailand in a fair and honest way.

Just my two cents worth to try and help the poor folk see what is really happening here. I am a guest here so it is of course up to them, but I think this restricted tax reduction, aimed solely to help the wealthy and fat cats, is totally missing the point of helping ordinary Thai families, which is something the PTP seem to falsely purport to do, However, from my observations, when if you look at the big picture it is quite clear that they truly do not work to benefit the ordinary and poor folk, although they are clever enough to fool most folk into thinking that they do. Not saying the Democrats look after the ordinary and poor folk either, they are both really for the elite when you open your eyes fully. Like many nations this country needs a true an honest peoples' party of the centre IMHO.

Edited November 24, 2013 by rayw

[Jameskrabi]

Well based on 120,000 x 13 onshore pam

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[spirit47]

So hand out tax cuts to the rich and spread the losses by increasing VAT that affects the whole country. So basically the 98% of the populous are going to cover the 2% tax cut for the 2% rich elite.

Kinda flies in the face of.......

'Cut in tax rate is not meant to help the rich'

Thats it, increase Vat and maybe energie tax to compensate gift for the rich, hits the mass of people and mostly the poor.

[Jameskrabi]

Well based on 15% reduction

120kx13 onshore I would be better of 236k a year . Is that right? How on earth can they afford to give such a vast reduction if this is the case?

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[Bagwan]

O)f course tax cuts won't worry the rich. Few of them pay taxes anyway.