Prime Minister Prayut Chan-o-cha Say’s Thailand’s Tax System Needs an Overhaul

 

BANGKOK – Prime Minister General Prayut Chan-o-cha yesterday at the 47th “Wharton Global Forum”, held at the Shangri-La Hotel in Bangkok pointed to the need for restructuring the country’s entire tax system in order to increase government revenue, as more funds are needed to support investment in infrastructure.

Prayut said local administrations had been able to collect Bt70 billion so far this fiscal year, or 15 per cent of the tax-revenue target, but the government had to allocate funds from the central budget to cover the balance of their spending.

“We are paying around Bt260 billion to the local administrations, and there is still around Bt200 to Bt300 billion left to be collected” by them, Prayut said.

“If the amount of tax revenue that can be collected by local administrations keeps falling or cannot be collected, the more money we have to allocate to cover it. And that means the money that could be used for investment on infrastructure and other things would also be gone,” the prime minister explained.

Some 700 people from 40 countries participated in this year’s event, which was arranged by the Wharton School, University of Pennsylvania.

“We have been using the same tax system for a long time now, and we have to find a system that suits Thailand. It remains to be seen whether tax reform can be completed by this government, but the whole system needs to be revised, including land and construction, excise, personal and corporate taxes.

The government is currently collecting the least tax in ASEAN,” Prayut told the Nation.

Prayut told participants that Thailand had to invest now, because the country had shelved public investments for too long.

There are many plans to invest in roads and railways all around the country, but the government currently does not have sufficient income to invest, he added.

“People understand this better, with the land and construction tax now having been put on hold … When the government lowers tax, it’s OK, but now when we want to raise it, we cannot do so – so how should we proceed? People want infrastructure projects, mass-transit projects, but there is no money” with which to invest, he told the forum.

Surin Pitsuwan, former secretary-general of ASEAN, agreed with the prime minister that the country needed to invest and said he believed that the tax system should be reformed so that the rich would pay more taxes than the poor.

The middle class should be encouraged to buy more agricultural products in order to help support the Kingdom’s farmers during this time of need, he added.

“People want the government to invest in railways, ports and roads, but nobody wants to pay [additional] taxes, so where do we start from? Meanwhile, middle-income citizens in urban areas should spend more to support agricultural prices and help spread income back to the rural areas,” he told participants.

“The prime minister has raised a good question, that if all the new generation step away from agriculture, then who would make the food for us and for the world? In terms of taxes, people with higher income should bear more of the burden, or else development will not take place,” Surin said.

Vorapol Socatiyanurak, secretary-general of the Securities and Exchange Commission, said putting the land and construction tax on hold was a good idea because the introduction of such a tax would involve many changes.

This is because it is intertwined with other taxes and more time would be needed to reconsider the new structure, while the current economic situation is not suitable for such an increase in the tax burden, he said.