Editorial: Target the top of Thailand's pyramid

[webfact]

EDITORIAL
Target the top of Thailand's pyramid
The Nation

New tax system must focus more on redistribution of wealth

BANGKOK: -- The government has made it clear that one of its top priorities is to restructure the entire tax system so as to boost revenue. Motivating the move is the need to find funding for massive infrastructure projects. Prime Minister General Prayut Chan-o-cha has also vowed that the reformed system would be fairer. But promising taxpayers a better deal is one thing, and delivering quite another.

There's no doubt that restructuring the tax system is an arduous task that is testing this administration to the hilt. The first attempt was swiftly challenged. The Finance Ministry was poised to go ahead with a proposed land and property tax when it was hit by a barrage of criticism. The critics said it would hurt low-income earners and asked why rich landlords and those with two or more properties weren't shouldering more of the burden. First-home homeowners still paying mortgages should be exempt from the scheme, they suggested. Prayut reacted promptly and slammed the brakes on the tax's implementation. He has instructed the ministry to study its long-term effects in a bid to avoid overburdening lower-income earners.

Unofficial figures suggest that six million people own 90 per cent of the land in Thailand. It should not have been so difficult to target the top of the pyramid first with the new tax. Drawing more tax from those who own more than one property would also help prevent investors speculating on rising land prices. This, in turn, would improve land utility.

Taxing the rich more without squeezing more money from the poor is a hard nut to crack. The land and property tax is one of two schemes initially slated for launch last year but now facing delays. The other is inheritance tax, which first saw light as a law under the government of Pridi Banomyong before being quickly scrapped, and it's never progressed beyond the planning stage in recent years. The post-coup Surayuth Chulanont government tried to reintroduce it in 2006, but backed off in the face of arguments that such laws could only be passed by elected lawmakers. However, the tax plan was not taken up by subsequent elected Parliaments.

The speedy introduction of the inheritance tax would no doubt bring cheer to low- and middle-income families, which would fit the government's claimed goals.

In fact, few would argue that the tax system needs reform. Only 15 per cent (Bt70 billion) of the revenue target for this year has so far been collected. Meanwhile, only 20 million people in a population of 68 million currently pay taxes. Tax collection must be more effective. Areas so far relatively untouched, like land and property, should be subject to fair and efficient schemes. On top of that the government should close loopholes that currently exist in taxation of the corporate sphere and of stock investors.

The government will win plenty of public support in restructuring the tax system if it can broaden collection fairly and eliminate mechanisms that favour the rich. We would have no complaints if the new structure brings in more revenue while leaving the poor with the little they have intact.

Source: http://www.nationmultimedia.com/opinion/Target-the-top-of-Thailands-pyramid-30256250.html


-- The Nation 2015-03-18

[Ozziepat]

Taxation is not a class warfare weapon, and tax system reform should not be driven by the perpetual shortfall in tax revenues. And while on the subject of revenue shortfall, this and just about all other articles on the topic in just about every country implicitly assume the problem is insufficient government income rather than excessive government spending - an obviously biased perspective. Taxes are but one source of funds for governments, and instituting a "fair" tax system while simultaneously trying to fix a revenue issue are conflicting objectives.

[chainarong]

How can something so simple be so hard , you tax by the bracket , if you earn 10 million Baht a month expect the top rate if you earn 10 Thousand a month expect to pay the bottom rate , how easy is that , when you look at Thailand from the longitude position you get the impression the top half of town don't want to do anything or part with anything , it is time for them to re-think their position and give a-little back , before your country implodes, although the Junta is contributing its fair share for that.

[maoro2013]

In Australia I studied tax in about 1975. Nowadays the tax act is 6 times the size and I don't see anything much changed. Typically I think of many countries.

[Lupatria]

only 20 million people in a population of 68 million currently pay taxes.

...and the percentage of the rich and influential in these figures is...?

[Thian]

Yup the rich Thai all speculate on new houses/condo's. They have many and just leave them empty.

But wait untill the crisis starts to get severe, then they will be falling over eachother to get rid of their properties.

Also i think there should be a law to not leave land unused. There are many empty unused lots of land in Bangkok at very busy locations who are being developed fast now. Those unused lots stop the development and attract illegal practises or just become dumps/taxidriver toilets.

There are also many highrise buildings totally empty, they have never been finished and occupy great spots. Why not force the owners to sell it or finish them?

[smutcakes]

As if they are able target the large connected families and military figures who financed the PDRC, you don't bite the hand that feeds you.

[p_brownstone]

only 20 million people in a population of 68 million currently pay taxes.

...and the percentage of the rich and influential in these figures is...?

Many years ago the Thai Finance Ministry decided to publish the names of the top 100 Personal Income Tax payers - the theory that people would be proud to make the list and thus submit proper Tax Returns.

When the first List was published the vast majority of the names were Farang or Japanese - mostly people working in Senior jobs at International Companies, where Tax was automatically calculated and paid properly.

There were a few Thai names as I recall but literally none of the big Thai / Chinese families were on it.

That, and the fact that a couple of Farang on the List had their homes burgled shortly after it was published, killed the whole idea!

Patrick

[trogers]

How can something so simple be so hard , you tax by the bracket , if you earn 10 million Baht a month expect the top rate if you earn 10 Thousand a month expect to pay the bottom rate , how easy is that , when you look at Thailand from the longitude position you get the impression the top half of town don't want to do anything or part with anything , it is time for them to re-think their position and give a-little back , before your country implodes, although the Junta is contributing its fair share for that.

Not many people earn Bt10m a year. They open a company and declare earnings at Bt600k a year, and have the company provide them with all the goodies as an expense to business. Understand?

[seajae]

hard when the thai system works on a cash economy, everywhere you go the majority of transactions are in cash as this way it can be hidden from any form of tax. In Australia I rarely carried much cash, just used my cards, here it is the opposite, you go away for a holiday and you need to carry many thousands of baht to pay for everything which means that there are a lot more robberies etc as the thieves know there is always cash to be had. Taxes are a pain but they need to be paid by anyone that owns land/house/units in Thailand as well as those that earn a wage, especially the rich as they are the ones that seem to avoid it just as much as the poor farmers. Laws need to be written up and adhered to, as long as there are ways for people to avoid taxes they will, removing the cash economy is a great way to start, paying cash for incidentals at local shops is one thing but when you see many millions of baht in cash changing hands at the land office when people buy houses, land, units etc you really have to wonder why they insist on cash and not simply bank transactions, what are they trying to hide from the tax office?

[Chris Lawrence]

With the land tax, never saw any figures on how it would affect people? But the outcry was for the lower income earners?

Knee jerk politics?

[Tatsujin]

How can something so simple be so hard , you tax by the bracket , if you earn 10 million Baht a month expect the top rate if you earn 10 Thousand a month expect to pay the bottom rate , how easy is that , when you look at Thailand from the longitude position you get the impression the top half of town don't want to do anything or part with anything , it is time for them to re-think their position and give a-little back , before your country implodes, although the Junta is contributing its fair share for that.

I wonder (in recent years) who it was that has avoided paying the most taxes here in Thailand? ... I have a sneaking suspicion that it's people from "both" sides of the political divide, with one side seriously taking the michael.

[Traveling Sailor]

If Thais were taught critical thinking, then this property tax thing would be an easy nut to crack. Or, if Thai legislators could put aside their superiority complexes and take notes/ideas from Europe Australia and America, it could be solved with ease.