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

[manarak]

The Rich get Richer

The Poor get the Picture

Sadly, that's not usually the case.

It's an established fact that higher taxes cause the rich/poor gap to widen, contrary to what common sense suggests.

Edited November 24, 2013 by manarak

[rogerdee123]

This Govt & PTP mob have known their time is limited. In addition to getting as much as they can for their own benefit and making hay when the sun shines they are in effect setting the stage for the next opposition controlled govt that will be faced with huge debt and reduced revenue. Thus the next Govt will be forced to raise taxes and stop all the hand-outs. The "give me" mentality of the Thai electorate as well as the political movers and shakers against the coming background of a fiscally responsible Govt doesn't bode well for the popularity of next Govt.

[smutcakes]

This Govt & PTP mob have known their time is limited. In addition to getting as much as they can for their own benefit and making hay when the sun shines they are in effect setting the stage for the next opposition controlled govt that will be faced with huge debt and reduced revenue. Thus the next Govt will be forced to raise taxes and stop all the hand-outs. The "give me" mentality of the Thai electorate as well as the political movers and shakers against the coming background of a fiscally responsible Govt doesn't bode well for the popularity of next Govt.

They probably still have a majority, yet you are already making excuses for the next Government!

You know changing tax rates in many countries is a fairly common occurrence. Its not some way out of left field thing they have done! You really think that they would bother changing the tax rate by 5% for the benefit of them? I doubt any politician (among many others here) pays any tax on a large % of their earnings, i hardly think its going to make that difference for them, if they wanted some urgent extra money before being voted out, I am sure they could come up with some far more profitable and rewarding ways without the burden of declared tax than reduction of the top rate payable by 5%! Anyway its good for me personally, as i suppose it may lessen my tax bill by a few 100 baht a month.

[JRSoul]

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.

Which overlooks that the "grass roots" voter base doesn't pay income tax. But they do pay VAT and excise, both increasing/increased, while taxes for the better off (apparently including you and smutty) are reduced.

"I'm all right Jack?"

[rogerdee123]

This Govt & PTP mob have known their time is limited. In addition to getting as much as they can for their own benefit and making hay when the sun shines they are in effect setting the stage for the next opposition controlled govt that will be faced with huge debt and reduced revenue. Thus the next Govt will be forced to raise taxes and stop all the hand-outs. The "give me" mentality of the Thai electorate as well as the political movers and shakers against the coming background of a fiscally responsible Govt doesn't bode well for the popularity of next Govt.

They probably still have a majority, yet you are already making excuses for the next Government!

You know changing tax rates in many countries is a fairly common occurrence. Its not some way out of left field thing they have done! You really think that they would bother changing the tax rate by 5% for the benefit of them? I doubt any politician (among many others here) pays any tax on a large % of their earnings, i hardly think its going to make that difference for them, if they wanted some urgent extra money before being voted out, I am sure they could come up with some far more profitable and rewarding ways without the burden of declared tax than reduction of the top rate payable by 5%! Anyway its good for me personally, as i suppose it may lessen my tax bill by a few 100 baht a month.

Hi Smutcakes. Sorry I guess I wasn't clear. My intention wasn't to make excuses for the next Govt, whoever that may be, but rather to point out possible political (not monetary or fiscal) motivations of the current Govt for giving the tax cut alongside the debts they are running up with the rice scheme, the flood projects, the 2 trillion loan, etc etc etc etc. I see the tax cut as a fiscal mistake .. same same as all those big spending projects. I guess I'm not a believer in supply side economics.

[NeverSure]

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

I'm no Republican but I don't think you understand. If you tax the rich too much, they will figure out a way to dodge it, and lose incentive to risk capital. That's the opposite of what's needed, everywhere. Let me give you an example.

30 years ago, Detroit Michigan was by far the largest auto manufacturer in the world. It had 300,000 good paying auto manufacturing jobs. Second tier jobs were all over the US making tires, lights, paint, etc. for all of those cars.

TODAY due largely to Michigan's greed and belief that they could bleed those manufacturers, there are only 30,000 of those jobs there. 90% have left. General Motors alone now manufactures cars in 35 different countries including China where it is simply cheaper in every way.

Detroit is largely abandoned and in ruins. The city is bankrupt. It went from being the pride of the USA to a junk pile in less than 30 years due entirely to government policies.

So you do need to give an incentive to "the rich" before they will invest and create jobs.

Thailand needs to give more incentive to the rich and the corporations. It is losing opportunity as Vietnam and Cambodia and next Myanmar begin to pick up more investment capital and more manufacturing and exports. Just look at the horrible import duties placed by Thailand on manufacturers who import raw materials or parts or machinery.

Capital from "the rich" is like a magnet that will be attracted to wherever there is the greatest return. If the greatest return isn't investing in job creating enterprises, it will go elsewhere and maybe just languish in something safe rather than the risk of business formation. Or it will go somewhere else and not come back.

[Time Traveller]

Everyone complaining on here about the tax reduction seem to be totally clueless. So here's a tip. The rich don't pay tax at the top marginal personal income tax rate. So it really doesn't matter at all if the rate goes from 37% to 35% (or 33% or 31% or 29%), since the wealthy put their income in companies which pay tax at the corporate rate - 20% - and some companies legally pay even less tax than that.

If anything reducing the top tax rate could make it more attractive for high income foreign workers.

Edited November 24, 2013 by Time Traveller

[MrSlatersParrot]

http://www.nationmultimedia.com/business/Tax-evasion-tops-corporate-graft-portfolio-TDRI-fi-30216623.html

Tax evasion tops corporate graft portfolio, TDRI finds

Chairat Srisuk
The Nation October 9, 2013 1:00 am

"Based on TDRI data, 64 per cent of corruption cases involved tax avoidance and 11 per cent collusion in bidding for state contracts.

Most penalties for corruption are fines, ranging from Bt500,000 to Bt1 million. Of the 220 cases filed with the Securities and Exchange Commission from 1992 to 2009, only 12, or 5 per cent, were punished."

[Arkady]

"The lower tax rate would encourage an influx of professionals, who are more interested in the top tax rate, than tax deductions."

How are they going to create all these new jobs for professionals paying significantly more than B4 million a year which is where the 37% tax rate now starts?

[asiamint]

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

I'm no Republican but I don't think you understand. If you tax the rich too much, they will figure out a way to dodge it, and lose incentive to risk capital. That's the opposite of what's needed, everywhere. Let me give you an example.

30 years ago, Detroit Michigan was by far the largest auto manufacturer in the world. It had 300,000 good paying auto manufacturing jobs. Second tier jobs were all over the US making tires, lights, paint, etc. for all of those cars.

TODAY due largely to Michigan's greed and belief that they could bleed those manufacturers, there are only 30,000 of those jobs there. 90% have left. General Motors alone now manufactures cars in 35 different countries including China where it is simply cheaper in every way.

Detroit is largely abandoned and in ruins. The city is bankrupt. It went from being the pride of the USA to a junk pile in less than 30 years due entirely to government policies.

So you do need to give an incentive to "the rich" before they will invest and create jobs.

Thailand needs to give more incentive to the rich and the corporations. It is losing opportunity as Vietnam and Cambodia and next Myanmar begin to pick up more investment capital and more manufacturing and exports. Just look at the horrible import duties placed by Thailand on manufacturers who import raw materials or parts or machinery.

Capital from "the rich" is like a magnet that will be attracted to wherever there is the greatest return. If the greatest return isn't investing in job creating enterprises, it will go elsewhere and maybe just languish in something safe rather than the risk of business formation. Or it will go somewhere else and not come back.

Well said neversure, at last someone with common sense.

France is trying it's best to repeat the mistakes of Detroit and many other countries as well.As packer said money goes where it's treated best, it's as simple as that unless you want to live Stalin style.

Governments round the world waste/scam money, why would anyone want them to have more of it is beyond me. Brainwashed by the idea of tax the rich and all will be ok, it has never worked in history.

[belg]

why rich people should pay less?

are they a big asset for the economy?

they buy one big house or a few big houses & cars, not thousands !

they don't create jobs, they only employ more people to make more profits

if profits goes down 1% than they are rapid to throw away many of the employees anyway

[tomacht8]

pure diversionary tactic, diversion, red herring, throw dust in eyes.

They burned and still burning in the rice and car programs approx. 1.000 Billion Bahts

And now they're worried about allocation effects in the 10-20 Billion Baht range.

laughable

[MrSlatersParrot]

Margaret Thatcher first proved that if you lower the highest tax threshold as it was then at 90%+you get more back from the wealthy.

France yes is going backwards.

The article I posted from the Nation above points out the high level of under-reporting of earnings in Thailand and the failure of the judiciary etc to tackle the problem with 64% of corruption cases involving tax avoidance.

Also as companies falsely lower their valuations borrowing costs increase.

Listing on the SET is seen as something of a cure

[MrSlatersParrot]

This Govt & PTP mob have known their time is limited. In addition to getting as much as they can for their own benefit and making hay when the sun shines they are in effect setting the stage for the next opposition controlled govt that will be faced with huge debt and reduced revenue. Thus the next Govt will be forced to raise taxes and stop all the hand-outs. The "give me" mentality of the Thai electorate as well as the political movers and shakers against the coming background of a fiscally responsible Govt doesn't bode well for the popularity of next Govt.

Well perhaps a '97 property crash may be on the cards and the Dems are in need of re-obtaining power to weigh off their friends (including Abhisit's company) when all these overpriced and oversupplied condos remain unmarketable.

[Emptyset]

"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.

Clearly not a lie as richard_smith237's chart shows. Not saying I agree with the move mind - but if this is instead of offering more entitlements, it probably won't make any difference. I'm surprised the government actually thinks a 2% tax cut will have anyone moving to Thailand. I mean, it's not going to be too significant for a rich individual, but it will be significant for the government's revenue according to these figures. What they should've done is just cut the tax for lower and medium income earners as they have done (is that actually where most of the lost tax revenue mentioned in the article comes from anyway?) and kept the higher tax bracket at the same %. Then they would've won the PR victory of helping relatively lower income groups, whereas instead the press has focused on this angle that they're helping the rich...

The difficulty is striking a balance between GDP growth and rising inequality (actually it isn't rising atm, but it will be if tax on the highest earners is cut much further). Inequality won't be as much of a concern so long as the incomes of those at the bottom continue to grow as they are, but it should be something of great concern in the medium, long-term. The corporation tax cut made more sense in the context of the increase in minimum wage. The government was effectively subsidizing the major corporations wage payments to workers in order to keep those corporations in the country, providing jobs and growth etc. But I don't see the point in this 2% cut. It won't have any rich people rushing to Thailand. It's a regressive move.

Edited November 24, 2013 by Emptyset

[indyuk]

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.

If I thought this to be the PTP party's game I would personally wish to 'dance upon their grave'.

[Emptyset]

Margaret Thatcher first proved that if you lower the highest tax threshold as it was then at 90%+you get more back from the wealthy.

France yes is going backwards.

The article I posted from the Nation above points out the high level of under-reporting of earnings in Thailand and the failure of the judiciary etc to tackle the problem with 64% of corruption cases involving tax avoidance.

Also as companies falsely lower their valuations borrowing costs increase.

Listing on the SET is seen as something of a cure

Pretty sure that Thatcher point isn't true. Her government used the North Sea oil revenues and VAT increases to make up the shortfall. Anyway, she cut taxes on the wealthiest from 83% to 40%, Reagan cut taxes on the wealthiest from around 70% to 28% - very different from the current Thai government's 2% cut in the top rate of tax.

Edited November 24, 2013 by Emptyset

[Thai at Heart]

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

I'm no Republican but I don't think you understand. If you tax the rich too much, they will figure out a way to dodge it, and lose incentive to risk capital. That's the opposite of what's needed, everywhere. Let me give you an example.

30 years ago, Detroit Michigan was by far the largest auto manufacturer in the world. It had 300,000 good paying auto manufacturing jobs. Second tier jobs were all over the US making tires, lights, paint, etc. for all of those cars.

TODAY due largely to Michigan's greed and belief that they could bleed those manufacturers, there are only 30,000 of those jobs there. 90% have left. General Motors alone now manufactures cars in 35 different countries including China where it is simply cheaper in every way.

Detroit is largely abandoned and in ruins. The city is bankrupt. It went from being the pride of the USA to a junk pile in less than 30 years due entirely to government policies.

So you do need to give an incentive to "the rich" before they will invest and create jobs.

Thailand needs to give more incentive to the rich and the corporations. It is losing opportunity as Vietnam and Cambodia and next Myanmar begin to pick up more investment capital and more manufacturing and exports. Just look at the horrible import duties placed by Thailand on manufacturers who import raw materials or parts or machinery.

Capital from "the rich" is like a magnet that will be attracted to wherever there is the greatest return. If the greatest return isn't investing in job creating enterprises, it will go elsewhere and maybe just languish in something safe rather than the risk of business formation. Or it will go somewhere else and not come back.

On Thailand they don't pay it anyway. You think the local businesses with their mercs in the car park and every family member working there claim that dad, the bosd earns 200k per month? Edited November 24, 2013 by Thai at Heart

[JRSoul]

http://www.nationmultimedia.com/business/Tax-evasion-tops-corporate-graft-portfolio-TDRI-fi-30216623.html

Tax evasion tops corporate graft portfolio, TDRI finds

Chairat Srisuk

The Nation October 9, 2013 1:00 am

"Based on TDRI data, 64 per cent of corruption cases involved tax avoidance and 11 per cent collusion in bidding for state contracts.

Most penalties for corruption are fines, ranging from Bt500,000 to Bt1 million. Of the 220 cases filed with the Securities and Exchange Commission from 1992 to 2009, only 12, or 5 per cent, were punished."

With the head of the DSI firmly in the government's pocket, I'm surprised that there were any cases involving state contracts, and the cynic in me suggests that they were with the previous government.

I fondly remember the laughing PM and her STOP CORRUPTION INVESTIGATION campaign

[isawasnake]

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?

More like buy stocks that their buds give them tips on, realize capitals gains, of which they are not taxed on. I guess the stock they purchase will open up some nice 300 baht a day jobs however. This is trickling down at its finest, and what a trickle it is.

Life is beautiful here. Being a "tax dodger" here could not be easier.

Edited November 24, 2013 by isawasnake

[Loles]

[Thunder26]

I don't know what they are talking about, but me as an average consumer can see that the prices have literally rocketed in the last 10 years. For example during that time you could buy street food for 20 or 25 baht, but right now in comparison it is 35 or 40 baht. Same for petrol, from 24 baht to 39 baht. 3 bottles of Leo were about 100 baht, but now they are 165 baht. So generally the prices went up by at least 50%. Unfortunately we cannot compare with the increase of people income, no way near 50%. I haven't done a study and you are welcome to contradict me:)

[Thai at Heart]

I don't know what they are talking about, but me as an average consumer can see that the prices have literally rocketed in the last 10 years. For example during that time you could buy street food for 20 or 25 baht, but right now in comparison it is 35 or 40 baht. Same for petrol, from 24 baht to 39 baht. 3 bottles of Leo were about 100 baht, but now they are 165 baht. So generally the prices went up by at least 50%. Unfortunately we cannot compare with the increase of people income, no way near 50%. I haven't done a study and you are welcome to contradict me:)

Well an increase of 50% over 10 years wouldn't represent horrendously bad inflation

[muchogra]

It's the second phase, feeding caviare to the rich, after feeding grass to the poor .

It's so ridiculous to say percentage wise, it's less! One percent reduction of the rich can feed many, but one percent of the poor can hardly feed a fish! What propaganda!

[Trouble]

There are two theories on how much to tax. First there are those who believe that the government should take as much as it can and that it should decide what programs to put the money into and how to spend it. This is the Obama Administration's policy. It hasn't worked well. For all the government spending it has done nothing in the US. Secondly there are those who believe that more money in the hands of the person who earned it will lead to increased spending putting the money directly into the economy and stimulate true growth and therefore more taxes. The same arguments are constantly being made in the USA at the moment. During the Clinton years tax reductions did help lead to robust economy. It was widely accepted back then that private investment (not government spending) was the engine of growth, and that the way to get more of something is to tax it less. Personally I go with the idea that more in the hands of the taxpayers creates spending by the middle class and investment by the more affluent. The economy seems to work better with less government interference. The rice pledging scheme is a prime example of government getting in the way. It will end up costing the taxpayers lots of money all the while creating an artificial price for a commodity. In the long run something will give and the price of Thai rice will find its true value in the marketplace. I believe the very reason that the US economy has remained sluggish is that fact that businesses can't begin to grow and add employees without the purchasing power of the middle class and affluent. Also without coherent and stable tax policy both for individuals and corporations no one can plan for the future. When governments constantly change tax policy it hinders investment.

Finding the true balance is the key. The Finance Ministry offered a scheme for reduction in taxes. It is NOT a break for the rich but a scheme to boost personal income which in turn leads to spending and economic stimulation.

[PaullyW]

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.

35% percent is particularly high when one realises that he/she gets almost nothing in return for it.

Walkable sidewalks? No.

Functioning police force? No.

Functioning fire force? Not really, especially for fires above the 3rd floor.

Well-maintained roads and safety engineering, traffic lights in place of u-turn cutouts on high-speed highways? No.

Good public education? No.

Reasonably functioning governments? No.

What makes it worse is that most of us foreigners pay disproportionately high tax as we are mostly well-paid, paid above board, onshore, and gain no rights or privileges for paying. Further, there are not a great many financial vehicles to shelter from tax in Thailand. Pretty bad situation - especially for foreigners.

Edited November 25, 2013 by PaullyW