The Thai taxpayer
In every country, the income tax imposed by the state is always a rewarding subject for (fierce) discussions during birthdays, in the pub or just between a number of colleagues.
All clichés then tumble over each other: we pay too much, it is not well spent, we have too many civil servants and also too many beneficiaries of social services.
Income tax in the Netherlands accounts for approximately 40% of total tax revenue and the same also applies to Thailand. In the Netherlands, everyone who works pays wage or income tax according to their assets. That also applies to Thailand, but due to the immense number of Thais, who have little or no income, income tax is mainly paid by the middle class.
In a recent commentary in 'The Nation', it was suggested that the middle class may well be in revolt now that the current government has all sorts of "nice" things in store for people on very low incomes. Think of the increase in the minimum wage, the tablets to be provided to students and the subsidy when purchasing the first car.
That's Thai politics, which I'm not commenting on, but interesting in that commentary was how the total income tax in Thailand comes about. Last year, only 2,3 million Thais (out of a total of 64 million) paid income tax as a contribution to government spending. Another 9 million Thais do file a return, but do not pay tax, because they earn less than 20.000 Baht per month.
The middle class, however, is in the awkward corner (where have I heard that before?) and is mangled between the poor and the rich. About 60.000 Thais pay the top tax of 37%, which is taxed on incomes above 4 million baht per year. This group accounts for approximately 50% of the total income tax revenue. A third of that revenue is paid by just 2400 Thais, who earn more than 10 million Baht a year.
The richest 20% of the working population pays more than 55% of the proceeds in income tax, while the poorest 20% contributes only 5%.
I think the Thai government expenditures cannot be paid from the income tax. I think a lot of tax revenue comes from import tax, corporate tax and VAT.
Chang Noi
Don't forget the taxes and duties on alcohol, tobacco and gasoline.
Unlike the Netherlands, VAT will not yield much, it is only 7% and is only levied by larger companies. I have noticed that luxury products such as TVs, computers and cameras are often made in Thailand, e.g. Canon and Nikon, but despite the fact that only 7% VAT is charged, they are more expensive than in the Netherlands, with 19% and import nb from Thailand.
I do not understand this. 60.000 Thais pay 50% of the income tax. Let's say that about 70.000 Thais will receive a 55% tax. If this is 20% of the working population, we arrive at a working population of 350.000. If we divide 350.000 out of a total population of (fuck 'em bite) 66 million, only about 1 in 200 Thais would be part of the labor force. I've read that Thai people are lazy, but I don't think this is correct 🙂 Am I making a mistake or is there something wrong with the numbers in the article? Is it true that 60.000 Thai cough up 50% of the income tax?
Quote: “Am I making a fallacy or is there something wrong with the figures in the article? Is it true that 60.000 Thai people cough up 50% of the income tax?”
Wasn't this piece in the Nation either 😉
The story is indeed from The Nation, which I translated without checking the figures mentioned in the editorial. I have looked into it a little further (see the Revenue Department website) and noticed that there are some errors in those figures.
First let's take a look at Thailand's total tax revenue. The most recent division into tax types is one from 2007, where personal income tax accounts for 17% of the total. Corporate tax (we would say corporate tax) accounts for 34% and VAT even contributes 38%. Then there is 6% from oil revenues and some other stuff.
These figures almost correspond with the figures from previous years, so I have assumed that this distribution is still valid today.
Income tax in 2007 was nearly 200.000 million Baht. If it is claimed that 60.000 Thais earn more than 4 million Baht and pay 37% tax on it, you arrive at about 120.000 million, assuming an average income of 5 million. The reasoning, that this group therefore pays 55% of the total income tax, is more or less correct.
The last sentence in the article is incorrect. The number of 60.000 Thais is nowhere near 20% of the working population, but considerably less and makes the ratio between rich and poor even more poignant.
That 60.000 Thai cough up 50% of the income tax is quite possible …. because not much income tax is paid.
Most of the population gets so little that they fall below the tax limit. Those above it mainly get their money from trade and probably have a very low salary (e.g. the PM also has a meager income officially).
I have read that in the top 50 of taxpayers there are many foreigners because they have an official (high) salary (income).
Indeed excise duties should also be a good source of income, but yes TIT and there will be no verifiable figure on the income and expenditure of the Thai government.
Chang Noi
For the sake of completeness, I also checked the claim that 40% of tax revenue consists of income tax. That is not entirely correct.
The latest Budget Memorandum shows that income tax in the Netherlands accounts for almost 20% of total tax revenue. Another 20% comes from National Insurance Premiums. So together still that 40%, which I mentioned, of which note!.
A Thai friend of mine had received a huge tax bill. When asked, it turned out that someone had used his data and made a lot of money in his name.
He contacted the person for an appointment that I also attended. It turned out to be a big advertising guy (one of those very big roadside billboards) who had briefly used it to split his income. This person gave him the amount to be paid in cash and then the case was over.
Going to the police was not an option for him, which causes even more problems. This seems to be possible in the land of smiles!