Thailand: Former Finance Minister warns of repercussion of planned tax cuts

  • The Palang Pracharath Party’s (PPRP) proposed lowering of personal income tax has raised concerns over a reduction in state revenues.
  • The proposal was one of the election campaign pledges made by the PPRP, the core coalition party, and the issue is picking up attention ahead of the government’s announcement of its policy manifesto later in week ending 28 Jul 19.
  • Finance Minister Uttama Savanayana said the policy is aimed at building equality between individuals who pay personal income tax to a maximum rate of 35% and corporations which pay corporate tax at only 25%.
  • Democrat MP and former finance minister Korn Chatikavanij said the government should not forge ahead with the proposed reduction of individual income tax at all rates because it will hit the country’s revenue enormously and shrink the tax base.
  • If implemented, the government will lose THB180bn in annual income and the number of taxpayers will dwindle by 3 million, down from a current 4 million people to just 1 million people, according to Mr Korn.
  • “This information is from the Revenue Department and I’m opposed to this policy because it adversely affects tax collection. And it is the responsibility of the opposition to follow up on this if the government fails to deliver,” he said.
  • Mr Korn called on the coalition government to reconsider the Democrat Party’s proposal to reduce personal income tax by 10% for every tax bracket except those who earn more than THB5mn a year.
  • “Under this proposal, is estimated that the government will collect THB60bn less,” he said.
  • This comes as the Revenue Department is studying two options for the government’s personal income tax cut campaign promise — one an outright 10% point cut across tax brackets and the other a 10% cut across brackets.
  • For the cut by 10% points, individual taxpayers who are liable to up to 10% rates now will be exempt, while those with brackets of 15%, 20%, 25%, 30% and 35% will pay tax at 5%, 10%, 15%, 20% and 25%, respectively, said Ekniti Nitithanprapas, director-general of the Revenue Department.
  • Under the alternative, taxpayers’ burden in each bracket will decline to 4.5%, 9%, 13.5%, 18%, 22.5%, 27% and 31.5%, he said.

External Link : https://www.bangkokpost.com/business/1716939/pprp-tax-plan-sparks-fear

External Link : https://www.bangkokpost.com/business/1716943/department-studies-income-tax-cut

23-Jul-2019


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