NESDC urges expanding tax base before implementing welfare policies
The National Economic and Social Development Council (NESDC) wants the next Thai government to expand the tax base before proceeding with its policy of providing extensive social welfare benefits.
Danucha Pichayanan, the NESDC's secretary-general, said that welfare policies for the public would be essential for the future, especially in Thailand which is projected to become an ageing society by 2030 with over 20% of the population above 60 years old.
However, Thailand is currently unable to implement a comprehensive welfare policy similar to some Scandinavian or European countries, where high tax rates are imposed to generate substantial income for extensive welfare provisions, he said.
Therefore, if Thailand genuinely intends to implement a comprehensive welfare policy, it must first expand the tax base to increase government revenue. If expanding the tax base is not feasible, an interim targeted welfare policy should be implemented to assist vulnerable groups with low incomes, ensuring that it does not burden the country's long-term fiscal sustainability, he said.
Danucha emphasised that the lack of a broad tax base is one of the challenges in the Thai economic structure.
In the International Institute for Management Development (IMD) rankings on countries' competitiveness in 2019, Thailand improved by three places to 30th out of 64 economies. However, Thailand's tax policy fell from 7th to 8th place due to the insufficiently broad and comprehensive tax base. This has implications for revenue collection and future budget allocation.
Currently, the number of ordinary income taxpayers in Thailand is not significant compared to the working-age population of 38 million people. Only 11 million individuals file personal income tax returns, with the actual number of taxpayers being only around 3-4 million per year.
Therefore, it is necessary to restructure the tax system to accommodate increased government expenditure, including the future expansion of welfare policies, Danucha said. This entails attracting more people into the tax system and fostering a better understanding that paying taxes is a crucial responsibility for citizens, not something to be avoided.
He said the NESDC would recommend widening of the tax base as crucial to support future government expenditures. To achieve this, it would be necessary to gather accurate information on how to increase taxpayer participation and broaden the tax base, he said.
Moreover, it is important to raise awareness among individuals that paying taxes is a responsibility that should not be evaded, he added.
