Thai government drive to
improve tax collection
Can't fund a welfare
state without taxes
By Jon Fernquest 
Thailand's
successful universal
healthcare system
is a landmark
achievement
(read article)Poverty and income inequality persists in Thailand despite these improvements (read analysis by professor Pasuk Phongphaichit of Chulalongkorn University via @Sanitsuda Ekachai's column). This sentiment has been echoed by many others.
Thailand must become more like a European welfare state, according to Magsaysay Award winner and former senator Jon Ungphakorn. Back in 2008 he called for:
...A guaranteed quality of life for all:... Thailand has sufficient resources to guarantee the basic needs of the population in terms of quality of life, and indeed this should be the first priority of any government.Tax system reform was essential to achieve this goal:We need to create a comprehensive welfare state system in which, in addition to our present universal health services, everyone has guaranteed access to education, from kindergarten to vocational college or university, through a system of universal scholarships.
Universal pensions are also necessary, as well as housing grants and social security support for the unemployed. (Source: BangkokPost)
...Tax reforms for social justice: It is widely recognised that the present tax system is unjust, inefficient and full of loopholes. Income tax fraud and evasion are widespread, particularly among businesses and in the agriculture and informal sectors. Yet no government has been willing to carry out the kinds of tax reforms necessary to reduce income disparities and to fund a comprehensive welfare state system.After describing the huge "economic disparity" between the rich and poor in Thailand, Dr. Pasuk also calls for tax system reform:The new government would be right to reduce value-added tax (VAT), which affects the poor more than the rich. But at the same time, income tax rates need to be raised and made more progressive.
In addition, we need to introduce wealth tax, inheritance tax, and land tax for land speculators and big landowners. Ways to drastically reduce income tax fraud and evasion have to be found. (Source: BangkokPost)
A
fairer taxation system could reduce this economic disparity...This can
be done by expanding the base
of direct taxpayers, introducing progressive land, inheritance,
capital gains and interest taxes, for example.
Unfortunately, the current taxation system worsens economic disparity
by allowing easy tax
evasion among the super rich while focusing on indirect
taxation which treats the poor the same as the rich...
Today's article is
about reforming the tax collection system in Thailand. State expenditure on free education, public health welfare, a comprehensive social security system and better agricultural policies have proven elsewhere to help bridge the gap...
In Thailand, however, the amount of state expenditure is not only too small, most of them benefit the cities, thus worsening the gap between the rich and the poor. (Source: Sanitsuda Ekachai's blog and ReadBangkokPost)
Ramon
Magsaysay Award -
every year prizes are presented to Asian individuals and organizations
in recognition for achieving excellence in their respective fields:
Government Service, Public Service, Community Leadership, Journalism,
Literature and Creative Communication Arts, Peace and International
Understanding, and Emergent Leadership (See Wikipedia and website)
welfare state - a government that actively looks after its citizens with programs in the areas of healthcare, housing, food, education, poverty alleviation, and support in old age (See Wikipedia)
welfare state - a government that actively looks after its citizens with programs in the areas of healthcare, housing, food, education, poverty alleviation, and support in old age (See Wikipedia)
Tax collection prospects healthier
Improved efficiency and data also helping4/01/2010
Wichit Chantanusornsiri
The Revenue Department expects tax collections for fiscal 2010 to exceed targets by at least 10% thanks to the improved economic outlook and efforts to expand the tax base.
Revenue director-general Winai Wittawatkaravet said the department aimed to expand the tax base by at least 324,000 people for the fiscal year ending on Sept 30, 2010.
tax collection - the
process of getting taxes that people need to pay the government by
law
prospects - the possibility that something might happen
Revenue Department - the Thai government agency responsible for collecting taxes
fiscal year - the year that spending plans (budgets) and actual spending takes place during
fiscal 2010 - the fiscal year 2010
targets - goals or levels you plan to achieve
exceed targets - achieve greater than your goal
economic outlook - what people believe will happen to the economy in the future
the tax base - the number of people paying taxes in the economy
expand the tax base - increase the number of people paying taxes
prospects - the possibility that something might happen
Revenue Department - the Thai government agency responsible for collecting taxes
fiscal year - the year that spending plans (budgets) and actual spending takes place during
fiscal 2010 - the fiscal year 2010
targets - goals or levels you plan to achieve
exceed targets - achieve greater than your goal
economic outlook - what people believe will happen to the economy in the future
the tax base - the number of people paying taxes in the economy
expand the tax base - increase the number of people paying taxes
The department, which has a collection target of 1.097 trillion baht for fiscal 2010, expects to "easily exceed" targets this year thanks to the improving economy, Mr Winai said.
The Finance Ministry last week revised upward its economic growth target to 3.5% for 2010, with a range of 3% to 4%.
An improved economy will naturally result in higher tax revenues, as companies and consumers post higher income and increase spending. Value-added tax collections, a key proxy for domestic consumption, have been rising steadily since August.
VAT collections in October and November, the first two months of the fiscal year, totalled 46 billion baht, a gain of 5.93% from the same period the year before and 8.91% over targets. Tax officials say VAT collections should continue to improve going forward with domestic consumption and imports.
Value-added tax (VAT) - a general
consumption tax for the production and distribution of goods and
services, added as a percentage charge based on price that reflects the
incremental value added by a given activity, a tax paid on the value
added to a good at each stage of production (See Wikipedia)
proxy, proxy variable - a statistic or number that can be used to roughly measure another number that cannot be measured (used instead of, as replacement)
key proxy for domestic consumption - used to measure the (rough) level of consumption
continue to improve going forward with domestic consumption and imports - will continue to improve in the future as consumption inside the country and imports into the country improve
proxy, proxy variable - a statistic or number that can be used to roughly measure another number that cannot be measured (used instead of, as replacement)
key proxy for domestic consumption - used to measure the (rough) level of consumption
continue to improve going forward with domestic consumption and imports - will continue to improve in the future as consumption inside the country and imports into the country improve
Mr Winai said other tax indicators have also improved steadily, whether they be withholding taxes for personal income, taxes on interest earnings or taxes on contractors.
"The reason behind the increase in tax revenues is clearly the improved economy thanks to fiscal stimulus measures," he said.
Thai exporters have also shown strong resilience over the course of the global economic downturn, with the dollar value of exports improving steadily in recent months despite the appreciation of the baht against the US dollar.
tax indicators - measures
and statistics that show how much and how well taxes are being
collected
withholding taxes for personal income - tax payments that the government takes directly out of employee paychecks as they earn their money (so they don't have to pay one huge lump sum at the end of the year)
taxes on interest earnings - tax paid for the money the bank pays you for keeping your money with them (interest)
contractors - companies that do project work for another company or here the government
economic downturn - a period of time when an economy is moving slowly, when business is slow and income is low
global economic downturn - a period when all the economies in the world are
fiscal stimulus - increased government spending and tax cuts to get the economy moving again after an economic downturn
fiscal stimulus measures - fiscal stimulus actions that the government takes
resilience - ability to grow strong again after weakness or failure, ability to bounce back
global economic downturn - a period during an economy is not doing so well, when business is slow and income is low
appreciation - when a country's currency becomes more valuable compared to the currencies of other countries (which makes goods exported from the country more expensive)
withholding taxes for personal income - tax payments that the government takes directly out of employee paychecks as they earn their money (so they don't have to pay one huge lump sum at the end of the year)
taxes on interest earnings - tax paid for the money the bank pays you for keeping your money with them (interest)
contractors - companies that do project work for another company or here the government
economic downturn - a period of time when an economy is moving slowly, when business is slow and income is low
global economic downturn - a period when all the economies in the world are
fiscal stimulus - increased government spending and tax cuts to get the economy moving again after an economic downturn
fiscal stimulus measures - fiscal stimulus actions that the government takes
resilience - ability to grow strong again after weakness or failure, ability to bounce back
global economic downturn - a period during an economy is not doing so well, when business is slow and income is low
appreciation - when a country's currency becomes more valuable compared to the currencies of other countries (which makes goods exported from the country more expensive)
Mr Winai said a resurgence in Thai exports would certainly lead to improved tax revenues, as companies post stronger profits and revenues.
But department officials say that efficiency and operational gains will also play an key role in increasing revenues, expanding the tax base and curbing tax evasion this year.
Mr Winai said the Revenue Department, which already boasts one of the government's most sophisticated information technology platforms, would continue to invest in technology to improve efficiency.
"We will leverage technology to improve our information databases, particularly regarding withholding taxes," he said.
efficiency - how
much can be produced with a fixed amount of resources (land, labour,
machines)
operational gains - improvements in operation
tax evasion - people illegally avoiding the payment of taxes
curbing tax evasion - stopping or reducing tax evasion
operational gains - improvements in operation
tax evasion - people illegally avoiding the payment of taxes
curbing tax evasion - stopping or reducing tax evasion
The Revenue Department plans to link its databases together with those of other state agencies, including local administrations, the Lands Department, the Labour Ministry, the Commerce Ministry and other agencies to improve cross-checking and deter tax evasion.
Contractors working on government-funded projects, for instance, will have taxes withheld from state payments to eliminate room for evasion.
cross-checking -
using some other source of information to check that something is true0
deter - make people not want to do something bad (for example: by punishing them for doing the bad thing)
government-funded projects - projects paid for by the government
deter - make people not want to do something bad (for example: by punishing them for doing the bad thing)
government-funded projects - projects paid for by the government
Mr Winai said tax officials also would take a more holistic approach to tracking financial flows and tax liability across an industry, starting from upstream manufacturers to downstream producers and end-users.
Officials will focus on business sectors that are expected to see higher revenues and tax liabilities with the economic recovery, including food and agribusiness companies and contractors benefiting from the 1.43-trillion-baht Thai Khem Kaeng government investment programme.
holistic approach -
dealing with the whole thing or problem rather than just details or a
part
tracking financial flows - following money as it enters and exits the country to see where it goes
tax liability - the amount of money that must be paid in taxes in the future (not paid yet)
upstream manufacturers - companies making parts and components used to build more complicated products (manufactured downstream)
downstream producers - companies that buy parts from other companies (upstream) and use them to build a product that they sell downstream
economic recovery - when an economy gets better after a period of very slow growth and low incomes
Thai Khem Kaeng government investment programme - the second stage of Thailand's fiscal stimulus response to the global economic crisis of 2008-09 that emphasizes investment projects
tracking financial flows - following money as it enters and exits the country to see where it goes
tax liability - the amount of money that must be paid in taxes in the future (not paid yet)
upstream manufacturers - companies making parts and components used to build more complicated products (manufactured downstream)
downstream producers - companies that buy parts from other companies (upstream) and use them to build a product that they sell downstream
economic recovery - when an economy gets better after a period of very slow growth and low incomes
Thai Khem Kaeng government investment programme - the second stage of Thailand's fiscal stimulus response to the global economic crisis of 2008-09 that emphasizes investment projects
The department has also developed a "tax map" for identifying areas that should come under special scrutiny. Under the programme, a handful of companies are assessed in each of the 121 jurisdictions nationwide tracked by the Revenue Department for risk assessments and the comprehensiveness and accuracy of their tax returns.
Financial data are compared against companies in similar industries to establish benchmarks and warning signs about whether a firm may be under-reporting income.
scrutiny - to look
at and check very carefully to look for problems
X comes under special scrutiny - someone begins checking X for problems (checking X more than others)
a handful of companies - a small number of companies
assessed (verb) - checked, evaluated (looking at something closely and saying something about it or judging it)
assessment (noun) - an evaluation of something
risk assessments - checking to find out how risky an activity is
a jurisdiction - an administrative division of a country (an area of the country with one law enforcement and court system in charge)
tracked - following something to see what happens to it
comprehensiveness - covers and deals with all aspects
accuracy - true and correct in even the small details
tax returns - the official document that every taxpayer provides to the government each year that shows income and the amount of tax owed the government (together with supporting calculations)
X comes under special scrutiny - someone begins checking X for problems (checking X more than others)
a handful of companies - a small number of companies
assessed (verb) - checked, evaluated (looking at something closely and saying something about it or judging it)
assessment (noun) - an evaluation of something
risk assessments - checking to find out how risky an activity is
a jurisdiction - an administrative division of a country (an area of the country with one law enforcement and court system in charge)
tracked - following something to see what happens to it
comprehensiveness - covers and deals with all aspects
accuracy - true and correct in even the small details
tax returns - the official document that every taxpayer provides to the government each year that shows income and the amount of tax owed the government (together with supporting calculations)
Financial data are compared against companies in similar industries to establish benchmarks and warning signs about whether a firm may be under-reporting income.
Mr Winai said the Revenue Department is also proactively reaching out to new entrepreneurs to enter the tax system.
E-commerce businesses, for instance, may be targeted through information gained from local internet service providers.
benchmarks - standards
ro reference points that can be used for comparison and measuring
others
establish benchmarks - create benchmarks
warning signs - things that you can see and measure that tell you that something is going wrong
under-reporting income - telling the government tax collectors that you made less money then you did (therefore paying less income tax)
proactive - taking quick action to solve problems before they happen
proactively reaching out to - contacting them even before there is a problem
internet service providers - companies that provide internet connections to homes and businesses
establish benchmarks - create benchmarks
warning signs - things that you can see and measure that tell you that something is going wrong
under-reporting income - telling the government tax collectors that you made less money then you did (therefore paying less income tax)
proactive - taking quick action to solve problems before they happen
proactively reaching out to - contacting them even before there is a problem
internet service providers - companies that provide internet connections to homes and businesses
The department is also becoming more aggressive in prosecuting accounting and auditing firms suspected of abetting tax evasion or participating in outright fraud such as claiming fake expenses as deductions.
aggressive in prosecuting - trying
very hard to take legal action against someone and get them punished
for wrongdoing
auditing firms - firms that check the accounting records of companies to make sure that everything is accurate
suspected - people believe that they might have done something wrong, but not yet proven
abetting - the crime of helping another person carry out a crime
fraud - the crime of lieing to and cheating people
outright fraud - fraud that is very easy to see
claiming fake expenses as deductions - lieing about spending money that can reduce the taxes you need to pay
auditing firms - firms that check the accounting records of companies to make sure that everything is accurate
suspected - people believe that they might have done something wrong, but not yet proven
abetting - the crime of helping another person carry out a crime
fraud - the crime of lieing to and cheating people
outright fraud - fraud that is very easy to see
claiming fake expenses as deductions - lieing about spending money that can reduce the taxes you need to pay
The estimated 20,000 accounting firms and practitioners in Thailand would be classified based on their credibility and past records of tax records of their clients. Companies using accountants with poor records to file their tax returns will come under special scrutiny during their tax reviews.
practitioners -
people who do a certain kind of job, task, or acticity (such as
preparing tax returns)
credibility - believability, how much people believe you (based on whether what you said in the past was true)
tax return - personal tax statement (the official statement given by people to the government each year that says how much money they must pay in taxes, how much they have already paid, and how much extra they need to pay at the end of the year or how much they overpaid so they receive back from government)
file their tax returns - give the statement of how much tax you have paid to the government
clients - customers
come under special scrutiny - authorities take a very close look at (to see if there are problems)
tax reviews - when authorities look at how much tax you have paid, to make sure it is the correct amount
credibility - believability, how much people believe you (based on whether what you said in the past was true)
tax return - personal tax statement (the official statement given by people to the government each year that says how much money they must pay in taxes, how much they have already paid, and how much extra they need to pay at the end of the year or how much they overpaid so they receive back from government)
file their tax returns - give the statement of how much tax you have paid to the government
clients - customers
come under special scrutiny - authorities take a very close look at (to see if there are problems)
tax reviews - when authorities look at how much tax you have paid, to make sure it is the correct amount
Mr Winai said another important goal for the Revenue Department would be to reinforce the civic duty of the public to pay taxes.
The department in recent years has increased its educational and marketing campaigns to meet this goal. Mr Winai said the Revenue Department has also joined hands with the University of the Thai Chamber of Commerce to develop a curriculum for new graduates about the tax system, the importance of individual tax planning and the duty of citizens to comply with the tax law.
Thailand's tax base includes an estimated 10 million individual taxpayers, 410,000 corporate taxpayers and another 410,000 registered entities in the VAT system.
Bangkok accounts for more than 65% of total taxes collected by the Revenue Department in terms of geographic location, with surrounding provinces such as Pathum Thani, Nonthaburi, Nakhon Pathom, Samut Prakan and Samut Sakhon another 11%. The Northern region generates the lowest amount of tax revenues for the department each year, at just 1.7% of the total.
reinforce - make
stronger
civic duty, duty of citizens - something that a person must do (duty, responsibility) because they are part of a country (citizen)
educational and marketing campaigns - activities over a long period of time to achieve marketing and educational goals
develop a curriculum - develop material and knowledge or skills that you will teach students in a class
comply with the tax law - follow the laws that tell you how much tax you must pay
civic duty, duty of citizens - something that a person must do (duty, responsibility) because they are part of a country (citizen)
educational and marketing campaigns - activities over a long period of time to achieve marketing and educational goals
develop a curriculum - develop material and knowledge or skills that you will teach students in a class
comply with the tax law - follow the laws that tell you how much tax you must pay
(Source: Tax collection prospects healthier, Improved efficiency and data also helping, 4/01/2010, Wichit Chantanusornsiri, link)
