Review tax incentives and prepare for ageing society: TDRI

 

 

The Thailand Development Research Institute suggested the government review the taxation system including the value-added tax and mutual fund-related incentives, as the country needs more revenue to support the elderly.

In his research, Yos Vajragupta, a senior researcher, showed that in 2010, Thailand's elderly population, aged 60 or over, accounted for 12 per cent and this ratio would rise to 25 per cent in 2030 - or one elderly per every 4 citizens. Population in this age group will demand better quality and quantity of welfare, which will demand more government funding. 

Commissioned by the Social Development and Human Security Ministry, the research showed that despite elderly allowances and free medical services, the government is yet to address duplication and inequality in the welfare system. Of total, 100,000-140,000 senior citizens are in dire need of financial supports.

Yos comes up with 3 models. 

First, a package of elderly allowance, social security (pensions), elderly homes, funeral service supports, an elderly financing institute, and the national savings fund.

Second, on top of the first package will be an increase in the allowance to about Bt4,085 per month.     

Third, putting in place a system supported by other social parties like youth volunteers and social enterprises. 

He estimated that during 2012-2021, the models will annually require Bt170-Bt460 billion, Bt170-Bt500 billion, and Bt170-Bt510 billion, respectively. Against 7 per cent expansion in gross domestic product, the costs would account for 7.9-10.2 per cent of government revenue and 1.6-2.4 per cent of gross domestic product. 

  The burden is now 7.6-9.3 per cent of total government revenue, and 1.3-2.2 per cent of GDP.

The research also pointed out that the financing burden tends to be affected by economic uncertainties and government's fast-track policies. To cope with this, the government needs to overhaul the taxation system, for higher revenue and greater management efficiency. Part of that is to increase the VAT to 10 per cent and review tax incentives like those related to investment in long-term equity funds (LTF) and retirement mutual funds (RMFs). 

Higher VAT rate will fully cover all expenses needed for the elderly welfare programme, it said.

"People in the working age tend to live a single life. In the next 10-20 years, they will be old. They should save now, to help support themselves on top of the government's programme," he said.