Ageing society prompts ministry tax review

Ageing society prompts ministry tax review

Older women take part in activities provided by the Bangkok Metropolitan Administration to learn and improve their skills.  SOMCHAI POOMLARD
Older women take part in activities provided by the Bangkok Metropolitan Administration to learn and improve their skills.  SOMCHAI POOMLARD

The Finance Ministry is studying a revamp of the tax structure by raising the ratio of asset- and consumption-based taxes because income-based ones, which dominate revenue contributions, are expected to decline as Thailand becomes an aged society.

Personal income tax revenue will likely fall in line with a decline in the working age population as the country has already become an ageing society, said Somchai Sujjapongse, permanent secretary for finance.

The Finance Ministry is evaluating the predicted demographic structure for the next 30-40 years, using the data to estimate the government's tax income stream, he said.

An ageing society has at least 10% of people aged 60 and older. The National Economic and Social Development Board reported last year Thailand had 11.2 million such people -- 17% of the population.

By 2036, the state planning unit predicts that segment will rise to 19.5 million people or 30% of the total population.

The UN defines a society as aged when 20% of people are over 60.

The Finance Ministry has looked to push several asset-based taxes in recent years. It managed to impose the inheritance and gift taxes in 2016, but they have not generated substantial income for the government and have been regarded as mere token gestures towards lowering income disparity, as the taxes have been watered down.

The much-awaited land and buildings tax will soon go to the National Legislative Assembly for its second reading, while a draft bill on land windfall tax -- a levy on inflated property price driven by transport infrastructure projects -- is being considered by the Fiscal Policy Office (FPO).

Mr Somchai said the Excise Department is studying new taxes on consumption.

He said savings are another issue that needed to be taken into account when demographic structure and state investment are considered.

The nation's savings amount to 2.5 trillion baht, which seems low when compared with other countries' and the government needs to invest in big-ticket infrastructure projects, he said.

Moreover, the current level of the country's savings cannot support an aged society in the future.

"At present, savings are quite low, particularly among self-employed workers. Only 500,000 from more than 20 million self-employed workers are members of the National Savings Fund.

"Without any savings measures, these people will become a burden on the government," said Mr Somchai.

The Finance Ministry wants retirees to have at least half of their final monthly salary for spending each month -- a level believed necessary for comfortable retirement, he said.

State officials contributing to compulsory savings schemes, receive 60-70% of their final month's salary after they retire, while others have around 20%, he said.

The Finance Ministry has assigned the FPO to promote financial literacy among people and to create new savings mechanisms.

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