Sara tax collection model to cut costs and raise income
If the initiative to apply the Semi-Autonomous Revenue Agency (Sara) model to tax-collecting agencies pans out, it will help boost the government's tax revenue and cut management costs, says Somchai Sujjapongse, permanent secretary for finance.
Sara's independence will be similar to the Bank of Thailand's and its top management will have relative freedom in managing tax collection, free from political intervention, he said.
However, the Finance Ministry and politicians still call the shots in setting tax policy, he said.
Applying the Sara model is on the national reform committee's agenda.
Management under the Sara model will have more flexibility than the current bureaucratic structure of the Revenue Department, the Excise Department and the Customs Department, he said.
Management can recruit their own staff and have discretion in setting salaries, which would help widen the tax base and address bribery, said Mr Somchai.
The Sara model allows a revenue agency to hold autonomous legal status without direct supervision and control by the state. A committee or board will take responsibility for oversight of the tax-collecting units, while a secretary-general will take charge of tax collection management.
Prasarn Trairatvorakul, a former central bank governor and chairman of the national reform committee, recently said the model is used by many developed, developing and underdeveloped countries, while Finance Ministry spokeswoman Kulaya Tantitemit said the ministry is conducting a feasibility study on turning tax-collecting agencies into independent units to improve efficiency.
As Thailand becomes a greying society and the government plans to spend on big-ticket infrastructure projects, tax-collecting agencies are faced with the challenge of increasing tax revenues to finance such investments.
The Revenue Department, the country's largest tax-collecting unit in terms of revenue, has missed its tax collection target over the past few years, falling short by 70 billion baht last fiscal year.
During 1992-2017, tax revenue accounted for 17.9% of the country's GDP on average. Thailand ranked 62nd out of 127 countries in a survey on tax revenue collection in comparison to GDP.
For tax-collecting management costs, the Revenue Department's costs represent 1% of collected tax revenue, the Excise Department represents 1.4% and the Customs Department's costs represent 3%. Advanced economies' tax-collecting costs average 1.04%.