The harsh punishment imposed on a senior tax officer involved in a value-added tax refund scam indicates how determined Finance Minister Sommai Phasee is in his push for the country’s tax reform to close a loophole that has caused tremendous loss of income to the country.
The Finance Ministry fired C-9 level Siripong Riyakarntheerachote (whose former name was Supakij Riyakarn) from the Revenue Department for the fraud which resulted in more than 3.2 billion baht in losses to the state.
The probe found 30 juristic people had set up bogus metal export companies and filed falsified documents with the Revenue Department’s Bang Rak office, where Mr Siripong was in charge, to claim VAT refunds during 2010-2011.
Various people were named as shareholders or directors, and some of the “companies” had offices that were found to be empty rented rooms. It was also found that all the transactions were made by the same six buyers who did not run any business.
Four operational officers were also investigated by the disciplinary committee. Their fate will be known next month.
The Finance Ministry will file a civil lawsuit against the officer and those involved in a bid to claim compensation from the case while the DSI has been asked to pursue a criminal lawsuit against them.
There is an increasing need in tax reform given that the state policy to maintain a budget deficit has continued for almost 20 years. While tax is the main income of the country, the amount that the state can collect is relatively low compared to some neighbouring countries.
It should be noted that the number of taxpayers in this country is low. Of the total 10.5 million people registered with the Revenue Department, only 360,000 earn the levels of income that are subject to tax or a minimum of 150,000 baht. There are more than 650,000 income earners who are in this non-tax group. Besides, people in some professions such as farmers are exempted from tax even though they can make high incomes.
For registered companies, of the total 500,000 firms, only 310,000 or 62.1% must pay tax.
The Revenue Department fell short of its tax collection target by 47 billion baht in the first seven months of fiscal 2015.
In pushing for tax reform, it’s necessary that the department gets tough with its own officials who have colluded with businessmen, helping them to cheat by making false income statements.
Some manage to buy tax invoices from other companies that will add to their expenditure in order to lower their taxable net income. By being part of the tax evasion process, these officials can fatten their pockets. Tax evaders deserve harsh punishments as an example for others.
It’s understandable that some people may not like tax reform as they are afraid that they will have to pay more. But that is not the reason we should put off the process. We need to reform our tax system to make it fair to all.
Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.