Revenue Dept seeks to increase number of personal income tax bands

The department has several small tax packages awaiting approval from the Finance Ministry and the Cabinet, director-general Satit Rungkasiri said yesterday.

"These include new income-tax rates, expansion of the tax base, tax related to the financial market and tax concerning the Asean Economic Community," he said.

The first one to go to the Cabinet is a new rule allowing spouses to file income-tax returns separately, he said. Finance Minister Kittiratt Na-Ranong is expected to submit it to the Cabinet next week.

A married couple is expected to pay less tax if each spouse files a separate tax form, as they will then receive more overall tax relief.

Satit said that as part of tax reform, the department is proposing to introduce more personal-income-tax rates. There are currently four rates for different income bands: 10 per cent, 20 per cent, 30 per cent and 37 per cent.

The Revenue Department imposes the 10-per-cent tax rate on income of between Bt15,001 and Bt50,000 per month; 20 per cent on income between Bt50,001 and Bt1 million; 30 per cent for income higher than Bt1 million but not exceeding Bt4 million; and 37 per cent for income above Bt4 million.

"We’ll not structure different income brackets in such a way that taxpayers think they will have to pay either a much higher or a much lower level of tax." He added that progressive rates would be maintained, with higher income groups paying higher tax.

For the high-income group, the department is proposing two options: either to increase the rate from the current 37 per cent, or to cut it.

A higher rate for the highest income group would be designed to narrow the widening income gap between the rich and poor, while a lower rate for the group would be aimed at promoting national competitiveness, Satit said.

The latter could be achieved if the tax rate were no higher than income-tax rates in neighbouring countries, he added.

"There are pros and cons for new tax rates, and it is up to policy-makers to decide whether to address the income-gap issue or promote the country’s competitiveness," said the agency chief.

To narrow widening income inequality, some have floated the idea of increasing personal income tax for the rich to 40 per cent, he said.

Tax reform is necessary as the government is cutting corporate income tax to 23 per cent this year, and then to 20 per cent next year, which will reduce overall revenue.

Satit said that about 11 million people had filed a personal-income-tax return this year, with 70 per cent of them doing so via the Internet.

The number of tax forms filed this year rose 0.64 per cent from the previous period. Seventy per cent of those seeking a tax refund had already received payment from the department, he said.

Over the first six months of the current fiscal year, from October to March, the department’s tax collection rose to Bt616 billion, 10.06 per cent up year on year, he added.

Meanwhile, Deputy Finance Minister Tanusak Lek-uthai said the ministry would next week propose extending for another month the excise-duty waiver on diesel, which is due to end this month, to ease the rising cost of living.

In a related development, the Finance Ministry will propose to the Cabinet next week a debt moratorium for good borrowers at state-owned banks.

"An estimated 4 million would be allowed to reduce their principal and interest-rate payments," he said.

Those eligible would be borrowers owing no more than Bt500,000 to the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives and other state-run banks, Tanusak said.

The government now wants to reward good-credit-record borrowers, after already having offered a debt moratorium for poor-credit borrowers, he added.