Economics: Abhisit to Tax Rich Less, Tax Poor More & Hurt ASEAN

Tax the poor more is a bad thing to do

by Pooky, this blog economics journalist

Civil Servants Bitter:

Rumors are leaking out of the Thai Finance Ministry of some un-happy civil servants, who are complaining bitterly, that the Abhisit government’s tax policy favors the rich at the expense of the poor.

Other says Abhisit will likely hurt ASEAN, as well.

Progressive Tax Structure Hurt:

“We believe in a progressive tax structure as the way to go for Thailand, but it looks like Thailand is moving in the other direction in taxing the rich less and taxing the poor more,” said a Finance Ministry civil servant source to one of the Red Shirt media.

According to the Red Shirt media report, the Abhisit government is looking to reduce taxes to spur investments. Particularly, according to the source, could be a reduction in personal income taxes and a broad package of investments related taxes.

According to the source, about 10 million Thais and about 400,000 businesses entities, would likely benefit from the tax reduction.

Poor to Pay More Taxes:

The source said while he agrees that a general tax reduction could help the Thai economy, however, the source said that at the same time, the Abhisit government is targeting to increase the taxation base, massively.

“What they are looking at is to start taxing people who never paid taxes before, and these are mostly those in the lower-income bracket that are self-employed and running small businesses,” said the source.

According to the source, Abhisit, through Korn, Thailand’s Finance Minister, has set a target of 300,000-400,000 new tax payers next year-mostly coming from the lower  income bracket. ”

Rich and Poor Gap to Widen:

The source said what discourages him the most, however, is that the Abhisit government has ordered Thailand’s grassroots administrative governing structure to “Wring” as much taxes as possible out of the local communities.

“The gap between the rich and poor in Thailand is significant and while the government plans to reduce taxes for Bangkok people and businesses, it is going about trying to increase tax collection from the grassroots. I am highly disappointed,” said the source.

Complaining bitterly, the source added, “Some civil servants are greatly angered that their advice to tighten the rules on taxation of Bangkok’s based businesses operation outside of Bangkok, so that the income tax goes to the local communities, were rejected.

“I hate it very much to say this, but they want to pay taxes in Bangkok because they have the connection here to get away with a good tax break,” said the source.

ASEAN Hurt:

Meanwhile, in other business related media, some columnist have openly warned Abhisit that reducing taxes, will likely see a similar move by other ASEAN countries.

“This government should just take a look at similar tax and investment related tax move in the past by Thailand, because it had always been matched by other ASEAN countries such as Singapore. We are part of a group but we are also all competing. What Abhisit will likely end-up doing, is instead of helping Thailand become more competitive, it will end up being a grand sale of ASEAN, as others have no choice but match Thailand’s position,” said a columnist.

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