NLA approves first reading of inheritance tax bill
The National Legislative Assembly (NLA) yesterday approved in principle the inheritance tax bill and another bill to amend the Revenue and Taxation Code.
Finance Minister Sommai Phasee said that in Thailand, tax revenue equated to 18 per cent of gross domestic product, while in developed countries it was more like 30-40 per cent of GDP. The levy of 10 per cent on estates above the Bt50-million threshold will raise tax revenue to 21-22 per cent of GDP, he claimed.
However, some NLA members argued against the tax.
Pradit Wannarat noted that 12 of the 25 countries that had adopted an inheritance tax had since abolished it, such as Canada, Australia, New Zealand and Norway, since it was not worth collecting.
Thailand’s rate of 10 per cent would be the fifth-highest in the world. Pradit questioned whether the inheritance levy would be a form of double taxation, as the recipients had already been subject to either individual or corporate income tax.
Other options to raise tax revenue should also be considered such as hiking the excise on liquor or cigarettes, he said.
Kosol Petchsuwan said Thailand should make sure it could prevent the inheritance-tax avoidance many countries had experienced. He added that the inheritance tax might prompt the wealthy to transfer assets to other countries where there are no such taxes.
Beneficiaries who are young might find it difficult to pay the tax, he said.
Somchai Swangkarn said other related bills should also be expedited for NLA vetting to ensure that taxes could be used to reduce income inequality, such as the real-estate-tax bill.
Jet Sirataranont said he was concerned that the inheritance tax might not be able to achieve the government’s goal of bridging the income divide, since there are some ways to avoid this tax.
Sommai said the tax should be levied at a fixed rate instead of a sliding basis, as it is aimed at high-income people, not middle-income people.
He added that many of the countries that had cancelled this type of tax already had an efficient income-distribution system in place, he said.
The NLA voted 160-16 in favour in the first reading of the inheritance-tax bill, with 10 abstentions. It also voted 172-8 for a bill to amend the Revenue and Taxation Code. Seven declined to vote.
