A member of Prawase Wasi’s reform committee has proposed tax increases, in VAT in particular, to implement the government’s welfare programme.

On 25 Aug, Nipon Poapongsakorn, President of the Thailand Development Research Institute (TDRI) and a member of the Reform Assembly Committee chaired by Prawase Wasi, said that the committee was conducting a study for a tax reform plan to bring about justice and solve inequalities.  The taxes include VAT, income tax, excise taxes, property and land taxes, and stock exchange taxes.  The first to be studied is VAT, which is instrumental in the social welfare policy promised by Prime Minister Abhisit Vejjajiva for the near future.

‘Social welfare involves most people in the country, and so does VAT.  So they should be considered together, on the premise that if you want more social welfare from the state, you have to pay more tax.  VAT should, therefore, be increased to 10% from the current rate of 7%.  In fact, 10% is specified in the law, but the government has reduced it to help the people,’ Nipon said, adding that the study on VAT and social welfare will take about two months to complete and then be proposed to the government.

The consideration of other taxes will focus on solving inequalities in tax collection and expanding the tax base. Those who have never paid tax will be required to do so, including medium and small entrepreneurs, traders, vendors, and farmers.  In order to bring these people into the base, they will be required to submit tax payment forms when they apply for identification cards, when their income will be assessed for tax, Nipon said.

He said that the granting of privileges by the Board of Investment would also have to be reconsidered.  He proposed that the tax privileges to promote investment should not be given blanket approval, but only when crucial conditions were met, such as investments for research and development, etc.  And an assessment should be made as to whether those who are granted privileges comply with the conditions under which they received them.  Other companies probably will have to pay tax at 20%, instead of the current rate of 30%.

‘In formulating any law, the committee is focussing on the benefits the country will receive.  The finished law will be proposed to the government, and it is up to the government to accept it or not,’ he said.

The Bank of Thailand has reportedly made a similar proposal that tax increases are necessary for the social welfare policy, but Korn Chatikavanich, the Minister of Finance, insisted that no tax increase was needed.