Only 2.3 million Thais pay income tax

[Admin]

Only 2.3 million Thais pay income tax 
Bangkok Post: 20 Aug 2010
Only 2.3m Thais pay income tax

Just 2.3 million people nationwide pay personal income tax to help finance public spending for the country's population of more than 64 million, says Satit Rungkasiri, the director-general of the Fiscal Policy Office.

While some 9 million people file personal income tax returns each year, the majority are exempt from tax liability as they earn less than 20,000 baht per month.

"Just 2.3 million people have to carry the burden for the entire population," Mr Satit said yesterday at the FPO's annual economics symposium. This year's theme focused on economic and social inequality, a major theme in the government's broader social and political reconciliation roadmap.

A closer look at the tax figures offers even a bleaker picture of the gap between rich and poor. Some 60,000 people each year pay taxes at the highest bracket of 37%, which applies for annual income of more than 4 million baht per year.

This group of 60,000 taxpayers however account for as much as 50% of total personal income tax collected each year. And a full one-third of income tax collected is paid by just 2,400 people in the country earning over 10 million baht per year.

Mr Satit said over the past two decades of economic growth, Thailand's income gap had remained roughly unchanged.

The richest 20% of the population account for 54% of total income, while the poorest 20% account for just 4.8%. Overall, Thailand's income distribution ranks around the middle when compared with other countries in the world.

Improving public welfare services is one means of closing income disparities, Mr Satit said.

"But economic resources are limited, so it is necessary to prioritise and focus on fundamental areas, such as education and health care," he said.

Welfare spending has increased significantly in recent years, including funding for free education for students, pension payments for the elderly and utilities subsidies for the poor.

On the funding side, the government is preparing to pass a new land and building tax aimed at encouraging landowners to develop properties and reduce land speculation in the market. Authorities estimate that 70% of total landholdings in the country are undeveloped.

Another law would establish a national savings fund to help boost retirement savings for the poor.

Deputy finance minister Pradit Phataraprasit said over time, it has become evident that efforts to reduce income disparity through redistribution have had little effect.

"Rather than thinking of how to split the cake, we should consider how to make the cake bigger, to help improve quality of life for the poor," he said.

Reaching this goal will depend on strengthening the economy's competitiveness. Mr Pradit noted that Singapore currently enjoyed per capita income up to six times that of Thailand.

"The aim of taxes shouldn't be to finance welfare programmes alone, but rather to strengthen the economy's competitiveness and guide future investment within the economy," he said.

http://www.bangkokpost.com/business/economics/191986/only-2-3m-thais-pay-income-tax