Is Thailand ready for negative income tax?

[Thanet]

Isn't this just another word for Social Security?

Sounds populist to me. The junta are breaking their own rules.

The article suggests the idea is being proposed by civil servants rather than by the junta themselves. I'd be pleasantly surprised if the junta did decide to implement it, even on a trial basis amongst the very poorest, though. If they did, even I might begin to accept that the coup could leave a positive legacy in this one respect at least. I'd actually go much further as I'm in favour of a basic citizen's income which guarantees a minimum standard of living to every citizen as a right. But this would be a very positive step towards that eventual goal. Of course, people make the same old moral hazard argument that people will just stop working and decide to be lazy if you just give them money. Actually in one trial I heard about, which took place in impoverished rural villages in Bangladesh, they found that productivity and entrepreneurialism actually increased. Contrary to popular belief, not having to worry about starvation can actually lead to more creativity rather than less. Also to the person above who was discussing education as a solution, to my mind it would surely be much easier to find time and enthusiasm for education if you're not having to work 16 hours a day to survive.

It's actually ironic that terryp describes the idea as Keynesian because the person the article mentions as being one of the most influential proponents of this idea, Milton Friedman, is also one of the key architects of the right-wing economic doctrine (now generally known as neoliberalism) which was adopted by Thatcher and Reagan in the 80s, beginning a radical shift away from the post-war Keynesian consensus which had hitherto prevailed. It's actually strange that an idea favoured by a right-wing economist and a right-wing president (Nixon) is now thought to be some sort of totally insane communist scheme. I suppose it shows how far to the right things have swung since the early 70s. This now actually seems to be one of the few things most on the left and some of the libertarians who favour the idea can agree on. The difference is that I guess the libertarians, like Friedman, think that the negative income tax should replace all state entitlements. I don't agree with that. I think it should be an adjunct to other redistributive policies & part of a social support system that guarantees every citizen certain rights, including free access to a decent standard of health care and education.

Very well put.

People who oppose social security usually give the same reasons: Thailand is a poor country, and social security makes people lazy.

Thailand is not a poor country, but it is a wasteful country that could produce a lot more than it does. A properly managed social security scheme is the hallmark of any civilised country -- one that maintains a level of dignity for citizens who have, through no fault of their own, fallen on hard times.

There but for the grace of God go all of us.

[Neurath]

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more Keynesian garbage...this way of thinking is very reasons the financial system is so messed up alt=bah.gif> ...make investments that create quality jobs ..not just keeping the poor down with idiotic state hand outs and still doing the same old employment jobs that obviously are not working to raise people out of poverty

Excellent! Keynsian garbage authored by Friedman. Couldn't make this s-it up. What next, Marxist rubbish authored by Hayek?

[bangkapi]

Fudge the ruling class money printing self-appointed elitists.

If people's work is not enough to make a living wage, we need a sound currency and fair pay for labor.

I'm tired of getting paid in paper fiat that central banks can conjure out of their asses or out of thin air... whatever.

We are in creepy days, indeed.

Edited August 27, 2014 by bangkapi

[AlexRRR]

From Australia's example it can be seem that the welfare system is the cause of an ever more demand for $$'s to fuel the ever increasing number of welfare needs. The system creates work for people to help the welfare recipients which is of no value to the economy but adds to the burden on the taxpayer.

Thailand should think very carefully about it before they act.

Rubbish, typical welfare bashing by the snug employed.

And the proposal of toping up income to the low income Thais wont work, the only way anywhere in the world for income parity is that its time the wealthier start paying more tax.

[jcisco]

Isn't this just another word for Social Security?

Sounds populist to me. The junta are breaking their own rules.

The article suggests the idea is being proposed by civil servants rather than by the junta themselves. I'd be pleasantly surprised if the junta did decide to implement it, even on a trial basis amongst the very poorest, though. If they did, even I might begin to accept that the coup could leave a positive legacy in this one respect at least. I'd actually go much further as I'm in favour of a basic citizen's income which guarantees a minimum standard of living to every citizen as a right. But this would be a very positive step towards that eventual goal. Of course, people make the same old moral hazard argument that people will just stop working and decide to be lazy if you just give them money. Actually in one trial I heard about, which took place in impoverished rural villages in Bangladesh, they found that productivity and entrepreneurialism actually increased. Contrary to popular belief, not having to worry about starvation can actually lead to more creativity rather than less. Also to the person above who was discussing education as a solution, to my mind it would surely be much easier to find time and enthusiasm for education if you're not having to work 16 hours a day to survive.

It's actually ironic that terryp describes the idea as Keynesian because the person the article mentions as being one of the most influential proponents of this idea, Milton Friedman, is also one of the key architects of the right-wing economic doctrine (now generally known as neoliberalism) which was adopted by Thatcher and Reagan in the 80s, beginning a radical shift away from the post-war Keynesian consensus which had hitherto prevailed. It's actually strange that an idea favoured by a right-wing economist and a right-wing president (Nixon) is now thought to be some sort of totally insane communist scheme. I suppose it shows how far to the right things have swung since the early 70s. This now actually seems to be one of the few things most on the left and some of the libertarians who favour the idea can agree on. The difference is that I guess the libertarians, like Friedman, think that the negative income tax should replace all state entitlements. I don't agree with that. I think it should be an adjunct to other redistributive policies & part of a social support system that guarantees every citizen certain rights, including free access to a decent standard of health care and education.

I'm going to agree with you and add on a little:

It is little recognized that government in a democracy (but not limited) is an extension of the community. Therefore welfare and assisting the poor may be taken as the community helping out the less fortunate and overall trying to raise the bar for everyone in that community. In that, Thailand does have issues in that many of its citizens are not full members of the machine as mentioned in the article. A large proportion apparently do not undertake their taxation commitments and nor is there any motivation for them to do so.

It the subtle implications of introducing welfare is that it may overall benifit the nation and the people by everyone contributing their share. This might actually work to strengthen the citizens investment in government in more tangible ways. Not withstanding the money going to waste so to speak, the outcomes overall should be positive. Despite all the ideas and proposals that come, go and burden people, at least its recognized that there is a problem, and more so that something has to be done.

Really at this point in Thailand the government should be trialing new systems of "welfare" in different regions to eligible people in large enough samples to ensure clear results. Several years of trial would be enough to indicate effectiveness and operational impact of the scheme.

[Seastallion]

"Yet, they are also right to stress that the scheme would be effective only when the government has sufficient information to identify who is eligible and how much they earn. "

Indeed. Tax every earner. There are hundreds of thousands, millions even, of market stall operators, tuktuk drivers etc earning a decent living yet paying no tax. They would all be eligible for the NIT payout as they registered a small amount of income which would probably be tax-free anyway.

Tax inspectors are needed, and penalties imposed on tax avoiders.

Of course, look at the rich tax avoiders first!

[BillyBobThai]

[tomacht8]

"The economists are right in noting that the scheme would be a first step in getting all Thais into the tax system. To be eligible for tax credit, everyone - street vendors, small farmers, motorcycle taxi drivers, etc - will need to file tax forms."

Wrong way.
It should first submit all tax reports - files - forms, which
have more then 100 rai land
or/and have more then 10 Million Baht in Accounts ( or stock exchange suitable securities)
or /and Income more than 3 million in a year after costs.

Think that would be more easy.

Edited August 27, 2014 by tomacht8

[northernjohn]

The bill keeps piling up, I predict a huge tax hike as revenue crashes and costs rise to meet the needs of the state. The circle will grow, prices will rise, salary will rise, prices will rise, tax will rise, prices will rise, prices will rise, tax will rise. OR huge job losses in the public sector.

Well it seems like every body is missing another big point here. Raising the tax on the rich. Will they pay it or just find another way to escape paying it leaving the government with a larger deficit?

[Jonmarleesco]

'... When advocates of [these] schemes insist that 'we can afford' to pay, ... they ought to specify just who 'we' are.' Specifics are something governments of every country and every hue are past masters at avoiding. Or, as the UK government now sees it, evading.

[khrab]

What are the English and Thai words for:

Hartz 4 ?

[hansgruber]

I think tax is ok if it's used correctly.

Spend that money on education instead of keeping them dumb with payouts.