Panel to propose tax reform plan with a windfall twist to boost revenue
A tax committee under the National Reform Council is set to propose the second round of tax reforms to the government, with the package to include the introduction of a windfall tax aimed at increasing the tax revenue of local governments.
The proposals will be presented to the NRC’s main committee on Monday before being proposed to the Cabinet.
"Most of the tax reform proposals, if approved, and the restructure of the tax system, will have to be done by this government because the reformation of taxes is difficult to archive under an elected government that is run by politicians who have a political base to worry about," said Kitipong Urapeepatanapong, the Thailand chairman of US-based multinational law firm Baker & McKenzie and a leading member of the NRC’s tax reform committee.
"After the proposal is handed to the government they will have a year to complete the tax reformation, and the reform of the tax structure and systems are the most important reformation tasks in my mind since the reformations of the macro-economy, the real sector, education, the bureaucracy and all other sectors will not be achieved without funding from the government’s own pocket," he added.
Kitipong explained that the theme of the tax reforms was to increase tax bases and not the rate of taxes, which could be lowered to attract more tax payers, while more incentives should be provided to encourage people to pay more tax.
He said the second of the proposals includes the reformation of the revenue code to promote tax registration where everyone, regardless of much they made per year, would be required to pay taxes so the government had a bigger database on who was paying and who was not.
The introduction of the smart card, e-invoice, e-receipt and the cancellation of the revenue stamp to facilitate the paying of income and corporate taxes, along with the cancellation of the dividend tax to increase the competitiveness of Thai companies, are part of the highlights in this second reform package.
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"I believe that inheritance, land and construction, the new revenue code, the new excise tax and custom systems, and environment taxes are set to be introduced within this government since they are already working on it," Kitipong revealed.
He explained that the windfall tax was just an idea at the moment but its structure would be proposed as part of the second round of reform.
A windfall tax is a tax on the excess profits of privatised utilities.
"Greece is in financial crisis because nobody wants to pay taxes and if Thailand does not want to follow the same fate we will have to reform our tax system so loopholes can be closed and the number of tax payers can increase," he said.
Meanwhile, Paiboon Nalinthrangkurn, a member of the NRC and chairman of the Federation of Thai Capital Market Organisations, has proposed setting up the National Financial Literacy Promotion Institution to deal with the promotion of financial literacy, and the setting up of a national pension system to reduce the government’s financial burden.
"People have to invest more in order to be able to take care of themselves when they are old. We need to learn from the example of Greece which currently has around 170 per cent debt to GDP [gross domestic product] and most of it is for paying a pension to their senior citizens," he said.
Paiboon also urged the government to pay back around Bt60 billion that the Ministry of Finance owed the Social Security Office so that the office could increase its investment and eventually led to increased social benefits in the future.
