For most people who earn a salary, paying personal income tax is pretty straightforward and generally unavoidable. But there’s no doubt that there are many who should pay — or pay more — but do not.
The proposed land and building tax — muted but cast aside by past governments because of political sensitivities — is long overdue. At one point, the proposal appeared to gain traction. But Prime Minister Prayut Chan-o-cha’s turnaround was swift and there’s no doubt the government should have handled this issue better.
Gen Prayut is fully aware of the need for more government revenue as he was fully briefed by his economic ministers. Five years ago tax revenue was about 20% of GDP. But this figure has declined and now stands at about 17%. And the trend is that the decline will continue.
On Monday Gen Prayut called for public understanding and even tried the stick approach by asking whether the public would prefer a VAT (value added tax) hike (from 7% to 10%) if they oppose the land and building tax.
But then on Thursday he did an about-face, saying the land and building tax plan was delayed because he feels for low-income earners affected by the economic slowdown. His decision caught top economic ministers off guard, and needless to say they are not pleased or impressed.
Increasing the VAT is not an option as the government’s economic ministers realise that the burden would fall on all — the rich, middle and low-income Thais.
This move would cause an even greater furore. The land and building tax should be implemented in a fair (especially to low and middle income earners) and transparent manner. The wealthy should pay more.
But the government did not handle this well and unveiled the move in a half-cocked manner. Not surprisingly, the government was bombarded with questions and criticisms and it became clear very quickly that the government had not yet studied the proposal thoroughly.
Gen Prayut, whom aides say is always concerned and sensitive to the problems of the poor, was urged through various channels not to move ahead with this tax. Big business has never supported this tax. They have made their views known privately in the past, and as far as they are concerned, it will never come to pass.
But aside from the interests of the wealthy, there are valid concerns about the tax’s impact on business, especially property, retail and hotels. But most important of all are the concerns of middle and low-income Thais. The government needs to thoroughly study the implications and impact of a land and building tax on them.
Many Thais, I believe, are prepared to pay as long as it is fair and they can see funds being used in projects and programmes that would benefit them and their families.
At present the government, through the National Legislative Assembly, is working to pass 370 pieces of legislation. This is an exercise in resolving issues of the past — a backlog that has piled up because of the political situation in recent years.
Many of the government’s plans and actions now are said to be laying the foundations for the future. But honestly, we do not know whether such plans will eventually come to pass.
But the land and building tax is one key policy which could go down as an achievement of this government, despite its controversial nature. While the government still needs to be more efficient in tax collection, a land and building tax is necessary.
This tax is aimed at generating more income for the governments of the future. It should not be shelved indefinitely as the next coalition government will certainly not make it a priority.
Since the prime minister has announced a delay, he should use this time to study the law’s impact and implications thoroughly to ensure fairness. He should have all the answers ready.
And once it is ready, he should work out a well-coordinated and planned public announcement strategy. Do it now. But do it properly and fairly.
Pichai Chuensuksawadi is editor-in-chief of Post Publishing. Contact him at pichai@bangkokpost.co.th.