Prize-draw scheme: Sommai plans carrot-and-stick approach to battle Thai tax evasion

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PRIZE-DRAW SCHEME
Sommai plans carrot-and-stick approach to battle tax evasion
Pichaya Changsorn
The Nation

BANGKOK: -- The Finance Ministry will resort to adopting a number of carrot-and-stick measures in a bid to combat widespread tax evasion, including a prize-draw scheme linking value-added tax invoice numbers to the government lottery results.

This means there will be a monetary incentive for taxpayers to keep VAT invoices for possible lottery-like wins.

Finance Minister Sommai Phasee said yesterday that considering the current unfavourable economic conditions, the ministry would avoid creating more financial burdens on middle- and lower-income earners.

It will, therefore, shortly propose to the Cabinet the postponement for another year of a plan to raise the VAT rate from the current 7 per cent to 10 per cent, he said.

However, the government needs to cover the tax-revenue shortfall resulting from such a postponement, which would otherwise bring in an additional Bt80 billion annually for every percentage-point hike in the VAT rate - Bt240 billion if it were to rise to 10 per cent.

One of the measures aimed at achieving this is to close a major tax-collection loophole by offering incentives to all taxpayers to ask for VAT invoices.

In addition, Sommai said the ministry would focus on enforcement of the law to ensure that tax evaders face stiff penalties, including imprisonment.

The ministry's target is to get an additional Bt100 billion-Bt200 billion in tax revenues from closing loopholes, representing 5-10 per cent of overall tax collection, which amounts to more than Bt2 trillion annually, he added.

Over the longer term, the target is to increase the country's tax-revenue base from 17 per cent of gross domestic product to at least 20 per cent of GDP. To expand the tax-collection base, Sommai said his ministry would soon submit to the Cabinet a plan to introduce a property tax, which is expected to generate Bt200 billion of additional annual tax income to the state.

"Do you think I have given up on the property tax proposal?" said the minister, adding that he would definitely go ahead with the controversial levy while in office.

On inheritance-tax collection, he said the revenue generated from the measure annually was estimated to be to the tune of just a few billion baht, much less than from the planned property tax.

However, each household will be required to pay just a small amount in property taxation, which will be comparable to the bills on their pay-TV packages, he stressed. Meanwhile, Sommai said Thai interest rates had already fallen to the "floor" and were at the lowest level in Asean.

Source: http://www.nationmultimedia.com/business/Sommai-plans-carrot-and-stick-approach-to-battle-t-30261569.html


-- The Nation 2015-06-04

[Strangebrew]

Actually the Iron fist approach works better Give a grace period of 6 months to either setup payment plan for back taxes or pay all owed. If they fail to do either if caught two things happen all bank accounts siezed and funds there in used to pay taxes owed, and they are not allowed to open another bank account till taxes paid. Any property they own taken and sold. Also name put in computer system so no credit cards unable to buy property get government services of any kind. In other words treated like a farang. If at that point some type payment plan not setup They can face jail term at hard labor and have to clean streets in bright orange jumpsuits thus shaming them in public. Oh any passports cancelled too.

[ezzra]

He should have gone with the durian and the stick approach, would have worked better....

Currently, fewer than 4% of the working force actually pay any income tax, many millions

others, mainly mom and pop SMe's don't pay a cent and they earn very good money...

Edited June 4, 2015 by ezzra

[Bluespunk]

Screw the carrot and get a bigger stick.

Then use the stick.

Harshly.

[FangFerang]

I think the invoice scheme only allows them to target local owned businesses that the offices in Bangkok are completely unaware of. You win an invoice and receive a visit afterwards, and a bit of a mousetrap approach altogether that will net...people who are not very bright.

Carrots for subsidized industries and large operations. Sticks for the poorer sector.

And the poster who suggested the mom and pop shops make a good living is a good deal out of focus. I know six mom and pop shops. None own a vehicle, and only one has a motorcycle that was made after 2010.

[BuaBS]

If you have less income , you spend less , something no government understands.

It's always the same , raizing taxes and going after tax dodgers.

Taxes are evil , your duty is to evade them as much as you can and apparently Thais are good at it.

Support the black economy , try buying as much as you can at markets or from producers directly.

[Paulbuick1]

Lets hope that Thailand dosnt take the Portuguese approach in collecting taxes now being looked at as a role model for Europe.Everyone now is forced to be connected on line to the tax dept from the man selling sardines in the fish market to getting your hair cut everyone has to issue an electronic receipt and i mean everyone. People are then invited and sent e mails and text messages to enter weekly or monthly receipt numbers online into the tax departments computer which can be put against your anual tax return and each entry acts as a free lottery ticket where you can win each week a BMW or AUDIO car.Since theyve introduced this system they have caught out hundreds of thousands of people fiddling there taxes and have collected a massive 60 billion euros in taxes in 2014 and only around 4 million people pay taxes plus the money they make from tourism. If you walk out of a shop and fail to produce a receipt for your goods to a street tax inspector you get an on the spot fine of 80 euros.That will probably never happen here but the Portuguese are leading in collecting taxes from citizons.

Edited June 4, 2015 by Paulbuick1

[ChrisY1]

If they dont start to get tough soon, the Greek effect will come in to play

[Ulic]

Forensic accountants going through the assets of all politicians, high ranking police officers

generals, and public servants working in the land office or other high risk of corruption departments

would get a bigger return on investment. 10% bonus on money recovered by these accountants.

to motivate them.

[Thai at Heart]

This lottery idea works brilliantly in China . VAT invoices have a scratch panel to win