Tax cut not meant to help Thailand’s rich

Thailand’s finance ministry anticipates that its plans to restructure the income tax rate will reduce government revenue by 27 billion baht (US$849 million) a year. However, the move is also expected to stimulate spending and boost value-added tax by up to 10 billion baht ($314 million) per annum.

In the government’s weekly television programme, Deputy Finance Minister Benja Louicharoen said the benefits would result in a higher standard of living for all taxpayers.

She said the top income tax bracket for earners would be lowered from 37 per cent to 35 per cent – still considered the highest in Asean.

It would put Thailand on par with Vietnam, she added. The lower tax rate would encourage an influx of professionals, who are more interested in the top tax rate, than tax deductions. The Kingdom now offers about 10 tax deductions, which reduce taxes by as much as 1.5 million baht ($47,174) a year.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong insisted that the change was not meant to benefit the wealthy. He said that while those subject to the maximum rate appeared to benefit from the change, in percentage terms their benefit was lower than those subject to the 10 per cent tax bracket.

“The old rate has been in use for over 20 years. This change reflects our plan to restructure the tax rate – rather than to offer more deductions,” he said, adding that it was part of a strategy to streamline taxes.

The new income tax rate follows a recent cut in corporate taxes.