Prayuth promises tax reforms

Prayuth promises tax reforms

Bids to reduce income gap, boost fairness

The government will introduce tax structural reforms this year to reduce the income gap and boost fairness and efficiency in tax collection, Prime Minister Prayuth Chan-ocha says.

In his policy statement delivered to the National Legislative Assembly (NLA) yesterday, Gen Prayuth said restructuring of the taxation system is on the cards and should be implemented within this year.

The highlights are introducing property and inheritance taxes. The premier also hinted about the possible scrapping of the tax deduction on long-term mutual funds (LTFs) and retirement mutual funds (RMFs).

"We will reform all the tax collection procedures. Property and inheritance taxes will be done within this year," Gen Prayuth announced.

"Tax waivers or reductions must not mainly benefit rich people," he said, adding that boosting the incomes of lower-income people so they will become the new taxpayer base is one key plan of the government.

Mutual fund purchases which benefit businesses but make the state suffer must be reviewed, he added.

The Finance Ministry and the Council of State have concluded their study on the proposed property and inheritance taxes.

Under the proposed structure, a 10% tax will be imposed on the recipients of assets valued at 50 million baht and more. Assets subject to inheritance taxes include registered assets such as housing, land, vehicles, cash deposits, bonds and shares.

Tax burdens will also apply to a juristic person to avoid loopholes that make it difficult to collect taxes. The measure is seen as necessary as some will try to avoid paying taxes on mobile assets that can be deposited overseas.

The government is expected to propose property and inheritance taxes to the NLA as soon as possible.

Introducing property and inheritance taxes has been an uphill task for many governments. It remains to be seen if the military regime succeeds with the tax reform proposals.

The National Council for Peace and Order (NCPO) has made tax reforms a priority policy on condition it must not raise the burden on low-income earners. The tax restructuring should boost fairness and efficiency in tax collection.

In his two-hour address, Gen Prayuth presented the policy statement which covered 11 areas and instructed state agencies to do their work properly.

He vowed to drive the economy forward with the emphasis on His Majesty the King's sufficiency economy philosophy. He pledged to narrow the social gap by pushing a social welfare system and supporting savings.

Gen Prayuth insisted people should have equal access to government services.

Other core issues included southern violence and access to education.

At one time he mentioned the Marine Department when he discussed water transportation and dredging work in rivers. He said he would send army engineers to inspect their work.

He threatened to take action against the Social Welfare Department as he discussed how people with disabilities and the disadvantaged were being abused.

"Don't let these people be abused. What is the Social Welfare Department doing? I wish I don't see anything like this again."

He said his government is aware of the high expectations from the public and has set high goals.

He also called for support from the NLA and the public for efforts to end the socio-political divide. He said their support is essential if the government is to fulfill its goal of bringing about unity.

"This government has high expectations of it both domestically and overseas. There is a lot of pressure on us. There are challenges and opportunities. We also hope the NLA and the National Reform Council [NRC] will scrutinise us. If we do a good job, give us a compliment," he said.

Gen Prayuth said divisiveness can be brought to an end through comprehensive reforms to be made by the NRC.

The 250-member NRC is expected to be formed by the end of October, bringing together representatives from all groups. Its task is to compile reform proposals in 11 areas outlined in the interim charter.

The prime minister also said he wanted to take a few minutes to touch on a personal issue in which he was accused of instructing commercial banks to hide his wealth.

"If I had 28 billion baht as reported by the media, I wouldn't be standing here. I would have used it to pay off debts for farmers. Are they nuts?" he said.

Gen Prayuth finished his policy statement address around noon and left for Sukhothai province to inspect the flood situation.

A total of 31 NLA members signed up to discuss the government's policy statement. 

In an interview before the policy statement address, Gen Prayuth said the government is aware of tourism industry concerns about martial law.

He said the government is considering what can be done to ease the situation.

"We have to help each other by warning those who won't stop [their activities]. If it continues like this, the conflict won't go away. It can escalate," he said.

He said the government will do its best to solve problems, especially the conflict in society, to prepare the country for the third-stage of his roadmap — organising the next general election.

Meanwhile, Kritsada Jinavijarana, director-general of the Fiscal Policy Office, said the finance minister has agreed not to extend the tax deduction on LTFs which will end in 2016.

He said the move is in line with the government's policy that tax-waiving schemes should not benefit rich people.

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