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Thailand Ranked 50th On World's Most Unequal Income Distribution Index

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Special Report:

A Slice of Wealth

The Government is trying to solve the chronic social discrepancy problems and move the country towards its ultimate dream of reconciliation. Nothing is easy, and unequal income distribution in the Thai society is part of the complexities, since only the tip of the population pyramid is enjoying their lives and wealth, while sufferings and problems surrounding people underneath have not been heeded.

As portrayed by Fiscal Policy Office (FPO) Director Satit Rungkasiri, income distribution between the rich and the poor has been contradistinctive for a long time, especially since 1992. Top 20% of the richest people in the Thai society account for 54% of the total national income, while the bottom 20% of the poorest have only 4.8%.

Based on the collection of personal income tax by the Department of Revenue, only about 9 out of 64 million Thai people file their income tax returns yearly; however, only 2.3 million of them actually pay taxes, while the other 7 million are exempted from the payment thanks to a number of tax reduction privileges. Out of the actual number of taxpayers, only about 60,000 people are in the highest tax bracket of 37%. Income is clustered only in few groups of people, and not many people are paying taxes at the rate they are supposed to pay for the national development expenses. In addition, Thailand has recently ranked 50th on the world most unequal income distribution index.

According to Thailand Development Research Institute (TDRI) President Dr Nipon Poapongsakorn, income distribution in Thailand has not improved since 1992. More than half of the people working outside the tax system still face a number of risks, which otherwise would have been covered had they paid taxes, and have uncertain income.

It is certainly easy to turn a blind eye on poverty by promoting people at the top and their giant conglomerates to give Thais and foreigners alike an impressive image of the country being a prosperous nation. However, in a more august manner, the Government should provide people at the pyramid base with accesses to a larger piece of cake --wealth in this case-- since no building can be strong without a solid foundation.

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only about 9 out of 64 million Thai people file their income tax returns yearly; however, only 2.3 million of them actually pay taxes, while the other 7 million are exempted from the

:w00t: Proofreader must have taken the day off.

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60,000 paying tax at the top rate and only 2mn people actually paying income tax???????

Seems that this is an unsustainable situation. Problem is, when you see the muppets who end up in government, I don't for one millisecond expect them to spend the money wisely anyway.

As a hint of a place for the taxman to start, I would recommend that the tax man demand the name and address of every new Mercedes, BMW, Lexus (and any supercar) customer every year.

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Does anybody know the salary threshold foe the top tax payers?

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Wow!!! Only 9M out of 64M file taxes and only 2.3M end up paying taxes. I would have thought that there are more than 9M working Thai's paying taxes on their salaries...salaries that get taxes automatically deducted. Don't these folks file tax returns to possibly get some money back, or do they just write it off? I know there are millions upon millions folks who get paid without any official paywork or any tax deductions; I'm talking about the folks who work in major businesses/organizations (e.g., governemnt, military, banking, hotels, factories, etc) who have tax deductions taken from their gross salary.

But the government does make a ton of tax money off the VAT and import taxes.

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Over 4,000,000 bt annually to get into the highest tax bracket.

0-150k = Exempt

150-500k = 10%

500k-1 mil = 20%

1 mil-4 mil = 30%

>4 mil = 37%

Everyone pays VAT though. There are also land taxes, corporate taxes, fuel taxes, import taxes, transportation taxes, auto-licensing taxes, etc. etc. etc.

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Over 4,000,000 bt annually to get into the highest tax bracket.

Cheers. That's about 330k baht a month. 60000 people? Does that sound right?

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Over 4,000,000 bt annually to get into the highest tax bracket.

Cheers. That's about 330k baht a month. 60000 people? Does that sound right?

Dont forget, if you have one family living under one roof. Mum, dad, 3 working sons, and a few other hangers on, it is perfectly easy to get to 300k but split the earnings between 5 or 6 people.

Hence the wonderful proliferation of medium sized family owned businesses in Thailand. I know loads of families around the Bangkok who live like this. Household earnings are 300k per month, each person earning 50 to 60k per month.

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Over 4,000,000 bt annually to get into the highest tax bracket.

Cheers. That's about 330k baht a month. 60000 people? Does that sound right?

Sounds low to me. There are probably another few hundred thousand who earn that much or more but pay little or no tax for various reasons.

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... There are also land taxes, corporate taxes, fuel taxes, import taxes, transportation taxes, auto-licensing taxes, etc. etc. etc.

Pretty much every country has these types of taxes. But when it comes to the yearly income tax filing for those millions and millions having income taxes deducted from their salaries, I'm just amazed so few Thai's are required and/or bother to file. Maybe the income tax being withheld is the absolute minimum and they already know that filing a return wouldn't result in any tax return or possibly make them liable for more tax.

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Companies and organizations I've worked for here in Thailand calculate the annual income for an employee, determine the annual tax burden, then divide that by 12 and deduct this amount every month. So if a person doesn't earn enough to be taxed nothing will be withheld except for social security payments if the employer is registered.

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This a typical piece of sloppy Thai journalism that adds more confusion than clarity. Public sector workers and those who work for large companies get tax taken directly from their salary (similar to PAYE in the UK) so have no reason to file their income tax returns. I believe this would only be necessary for self-employed people. The journalist gets confused between tax payment and tax returns.

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Only 60,000 people in the top tax bracket? What a joke.

How many Mercedes are there in Bangkok?

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I'm not really sure what to make of the stat....so, China is at 51, Cambodia is at 46, and yes, the US is quite ahead of Thailand in terms of unequal distribution of wealth coming in at #39....and then again, all of these figures are based on dates that are out of date?? http://www.photius.com/rankings/economy/distribution_of_family_income_gini_index_2010_0.html

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I'm not really sure what to make of the stat....so, China is at 51, Cambodia is at 46, and yes, the US is quite ahead of Thailand in terms of unequal distribution of wealth coming in at #39....and then again, all of these figures are based on dates that are out of date?? http://www.photius.com/rankings/economy/distribution_of_family_income_gini_index_2010_0.html

When you have Gaysorn and families with monthly earnings 3000 to 7000baht in the North East, gini co-efficients and statistics don't mean very much. It is an issue that should be addressed irrespective of statistics from other apparently more developed countries.

Just because they have their problems doesn't in any way mean that it should allow Thailand to sit on its laurels as some kind of utopian paradise.

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So 2.3M people support the Govt Tax thrash? That's fair ... ph34r.gif

As always the PAYE taxed wage earner always carries the tax burden of the country. The Pareto Principle (80:20) rule applies of course. But 12+M people only contribute 4%! Lucky they even have that statistic given the huge cash environment in Thailand.

The tax system as has evolved (means of collection) may not be ideal but a simple flat tax across all banking and remove all salary, exercise, and luxury taxes would stimulate growth, create a fairness to allow PAYE earners relief, and would also pay down the country's deficit. Even at a high rate of 3% Thailand would be in credit within 12 months if the corporate giants paid 3% of gross rather than accountability and tax only on 'declared' profits. It makes far more business sense to have a flat fixed rate across the board which can be factored into daily activities.

Simple and effective and logical but never likely to happen. blink.gif

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I'm not really sure what to make of the stat....so, China is at 51, Cambodia is at 46, and yes, the US is quite ahead of Thailand in terms of unequal distribution of wealth coming in at #39....and then again, all of these figures are based on dates that are out of date?? http://www.photius.c...dex_2010_0.html

What a joke... the US has a large income disparity gap than Thailand... they should be rioting in the streets in the US...

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This a typical piece of sloppy Thai journalism that adds more confusion than clarity. Public sector workers and those who work for large companies get tax taken directly from their salary (similar to PAYE in the UK) so have no reason to file their income tax returns. I believe this would only be necessary for self-employed people. The journalist gets confused between tax payment and tax returns.

just what I was thinking. The UK also has only a very few million people filing income tax returns. You just cannot form any hard conclusions without substantive comparative studies. I don't think there is any evidence from this little data to say whether Thailand is any better or worse than other countries at collecting taxes/avoiding taxes.

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This a typical piece of sloppy Thai journalism that adds more confusion than clarity. Public sector workers and those who work for large companies get tax taken directly from their salary (similar to PAYE in the UK) so have no reason to file their income tax returns. I believe this would only be necessary for self-employed people. The journalist gets confused between tax payment and tax returns.

Actually even when you have tax deducted from source you still have to file at the end of each year, to show you have had the right amount deducted, Often money is either owed or refunded.

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The Government is trying to solve the chronic social discrepancy problems and move the country towards its ultimate dream of reconciliation. Nothing is easy, and unequal income distribution in the Thai society is part of the complexities, since only the tip of the population pyramid is enjoying their lives and wealth, while sufferings and problems surrounding people underneath have not been heeded.

So it would seem that only those who have the most money enjoy life.

Must remember not to have any fun in future.

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A article a while back indicated that 70% of Thailand income was called 'Shadow Income'. otherwise, unsubstantiated, thus untaxed. If you can determine a number which seems to be unknown, you should be able to find all those hidden non taxed monies, with due diligence.

Sounds like the rats are more clever than those who set/place the traps (trappers). It is probably the same people building the traps, who are the object of the trappers. To finalize the system, the trappers are appointed, family/associates of the proponents of the system/traps. Does this have a familiar ring to it?

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Thailand isn't easily compared for taxation to the likes of USA or Europe because of the overwhelming proportion of business and employment conducted by cash. In these circumstances it becomes very difficult indeed to administer an income tax. Just think of the beaurocracy and tea money involved in trying to interrogate the affairs of middle income earners in Thailand! Not worth the aggro!

This throws the government back onto VAT, import and export duties, customs duties and stamp duties. Stamp duties in particular could be made to be very effective at taxing the rich. Nevertheless, it is difficult to see overall taxation as anything other than regressive, thanks mainly to the VAT and customs duties. In these circumstances the only way of balancing the tax system is to give things back to those on the lowest incomes. Hence nearly free schooling, health care, water supply and electricity supply.

The one thing that Thailand doesn't do that could make a huge difference to less well off people is to provide a state pension for the elderly.

I'd aslo like to know a bit more about Thaialnds stamp duty system - a tax per transaction on share sales and purchases, land sales and purchases and contracts - and the potential for increasing tax take this way.

Otherwise Thailands' tax system is in my view remarkably well balanced.

Chris

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The one thing that Thailand doesn't do that could make a huge difference to less well off people is to provide a state pension for the elderly.

They do this already, though the sum is a meager 500 bt per month. It is also provided to disabled people.

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