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WICHIT CHANTANUSORNSIRI
The government should move to collect taxes on assets to help close off loopholes in the tax system and raise funds to develop the country's social safety net, according to local academics.
Direk Patmasiriwat, an economist at Thammasat University, said an asset tax could raise tens of billions of baht each year to finance social development programmes.
Collecting a tax of, say, 0.1% per year on property worth one million baht and up and say 1% for assets worth over five million would raise 80 billion to 100 billion baht in additional tax revenues each year for the government.
Dr Direk, speaking at a conference on fiscal policy organised by the National Economic and Social Advisory Council, said a tax of less than 1% would not be a burden on the country, adding that the United States collected an average tax of 2% per year.
Added tax revenues in turn could be used to strengthen the country's social safety net.
Dr Direk cited studies that showed the poor typically saved only 3% of their income, or just 200 baht per person per month. After 30 to 40 years of work, a retiree might have savings of just 170,000 baht, a figure grossly insufficient to cover expenses to cover a person who may live past the age of 80.
"The government needs to place greater focus on this. Supplementing retirement savings by, say, 120 to 150 baht per person per month would help boost savings to 350,000 baht upon retirement," Dr Direk said.
"Total costs, meanwhile, would run around 40 billion baht per year, or just 2.5% of annual budget expenditures."
The government's role in the economy, at 18% to 20% of gross domestic product, was much smaller than the 35-40% of GDP in Western countries, Dr Direk said.
Public spending on social welfare services amounted to just 90 billion baht per year, of which as much as 60 billion went to services and benefits restricted to the civil service.
Narong Petprasert, a Chulalongkorn University lecturer, said the shift in the Thai economy from agriculture to industry had increased the need of a state-supported social safety net.
An estimated 12 million people currently work in the agriculture sector, amounting to around one-third of the total labour force. In contrast, 17 million work in the industrial sector.
Dr Narong said the poverty line definition of 1,386 baht per person per month used by the National Statistical Office seemed unreasonably low considering Thailand's status as a middle-income economy.
Using a definition of 3,000 baht per person per month would cover up to 20% of the country's 65 million people, or double the proportion of people living in poverty under the current definition.
"Just collecting a land tax for property in Bangkok of 0.1% would generate four billion baht in extra income for the state. This in turn would be enough to pay for benefits for some seven million baht," Dr Narong said.
"Six million people are registered as residents in Bangkok. But only an estimated one million are actual homeowners."
Two other academics, Duangmanee Laovakul and Euamporn Phijaisanit of Thammasat University, said that collecting a 0.01% land and building tax on half the properties in Thailand would create 43 billion baht in revenue per year.
The People Power Party, which leads the current coalition government, has long supported the passage of a new land tax to help finance social welfare programmes and close the income gap.
But to date, the government has yet to indicate any intention on pushing the tax through Parliament for approval.
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