Serious reform bids finally put on the table

Serious reform bids finally put on the table

The Ministry of Finance in recent years has come up with numerous fiscal reforms, including new tax measures, aimed to enhance Thailand's competitiveness and strengthen the economy. During this course of reforms, the ministry cannot afford to overlook the need for improved transparency, which is one of the most important reform aspects, within its own organisations.

The ministry is the main source of state funds, collecting as much as 2 trillion baht in revenue annually. More than 90% of that revenue comes from its three departments of revenue, excise and customs which have been plagued with corruption scandals in recent years. The ministry is in dire need of increasing transparency and rooting out corruption within these agencies. It also needs to ensure that revenue collection will be applied thoroughly and indiscriminately. Improved transparency will prevent revenue losses while increasing state funds without the need for imposing tax hikes.

The ministry has proposed several measures as part of its fiscal reforms. Its ultimate goals are to achieve fiscal sustainability, reduce budget deficits and bring about a balanced budget policy. In the end, the reforms will boost revenue in the private sector and personal incomes. The ministry also expects that fiscal policy reforms can facilitate the country's socio-economic development. These include tax incentives to attract investors, the use of tax tools to support industries or social welfare benefits to bridge economic inequality gaps among Thais.

Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

Needless to say, a number of the tax policy reforms introduced under the current regime seem to have been reforms in name only. For example, its proposed inheritance tax of 5% has been revised by the National Legislative Assembly (NLA) which raised the minimum value subject to inheritance tax to 100 million baht. This has been in effect since February this year. Meanwhile, a bill on new land and buildings tax, which has received the green light from the cabinet, has also been altered to be applied to properties worth 50 million baht and over.

Finance Minister Apisak Tantivorawong, a former banker, has realised the need for transparency and corruption prevention. Early last month, he came up with a moral organisation project for the ministry to implement.

The initiative is a good start as it implies the urgent need to tackle corruption, even though concrete plans are yet to be unveiled. At the moment, there is only a memorandum of understanding signed between the ministry, the Office of the National Anti-Corruption Commission, the Office of Public Sector Anti-Corruption Commission and the non-profit Anti-Corruption Organisation of Thailand. The move at least has raised awareness of the issue among officials of the ministry. A joint committee comprising representatives from the ministry and these organisations has been set up.

Such a move is well-suited for a ministry plagued with corruption scandals for many years. These include the high-profile tax evasion cases brought against four revenue officials who were sentenced to three years in prison in July for helping the kin of former prime minister Thaksin Shinawatra evade 16 billion baht in tax in 2006. They have been bailed out.

Another case involved other groups of revenue officials including a former revenue director-general alleged to be involved in the fraudulent value-added tax refund scheme between 2012-2013 totaling approximately 4.3 billion baht. The NACC has handled the probe into the case which is not yet final.

Collusion over import tax evasion among customs officials and car importers has cost the state billions of baht in lost revenue in past years.

State bank officials are also suspected to be involved in corruption scandals related to their approval of non-performing loans (NPLs). The accumulated loss in NPLs by two banks, the Islamic Bank of Thailand and the Small and Medium Enterprise Development Bank of Thailand, is estimated to be 80 billion baht.

In recent years, the ministry has tried to root out corruption and improve transparency by proposing a number of initiatives. For example, it has incorporated graft-battling integrity pacts, signed between state agencies and bidders, into procurement bids for all public projects worth 500 million baht or more. They require both parties to declare they will abstain from collusion, bribery and other forms of corruption in the project.

Moreover, the ministry's new e-bidding and e-market systems for the state's procurement process have helped prevent interaction between officials and bidding companies and avoid collusion. From April 2015 to May 2016, the systems have brought down the costs to the state with winning bidding prices coming in 10% lower than the references prices, resulting in massive savings of 28 billion baht in total.

The most important part of the fiscal reforms is government officials. No matter how strict a corruption-prevention measure is, individuals can still exploit loopholes for personal gains. Therefore, it is important to reform government officials of the ministry to ensure transparency and confidence.


Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

Wichit Chantanusornsiri

Senior economics reporter

Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

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