Minister urges tax system reshuffle

As Thailand’s demographics trend older, the nation urgently needs to adjust its tax structure and expand the number of people participating in the tax system to meet future expenses, says Deputy Finance Minister Julapun Amornvivat.
According to Mr Julapun, the Finance Ministry is studying a negative income tax (NIT) system to provide financial assistance to individuals with incomes below a threshold set by the government.
The goal is not to reduce the state’s welfare expenditure for the public, but instead to determine appropriate figures to ensure residents can sustain their livelihoods, he said.
Over the long term, Mr Julapun said the amount of welfare assistance needs to be assessed to determine the budget burden, as Thailand has already become an aged society.
If government aid continues to be used to supplement the budget for elderly welfare indefinitely, there is a risk funding will be insufficient. Therefore, he said a complete adjustment of the tax structure is required that attracts people into the tax system.
Thailand became an ageing society, meaning that people aged 60 and older exceeded 10% of the total population, in 2005.
In 2023, Thailand became an aged society, with the number of people aged 60 and older accounting for 20% of the total population.
This segment of the population tallied 13 million people as of Dec 31, 2023, according to data from the Department of Older Persons.
According to Mr Julapun, the NIT concept is in the preliminary study phase and could take 1-3 years before implementation.
STUDIES NEEDED
He said the Fiscal Policy Office (FPO) conducted studies several years ago, but as time passed, the international NIT framework evolved.
The initial principle of NIT was to offer assistance to those who had previously paid taxes to the state. For instance, if an individual worked and paid taxes, then became unemployed, the government would provide financial assistance to this individual.
The definition of NIT has now shifted towards a welfare provision model for low-income individuals who often do not fall within the tax system.
Therefore, previous studies need to be revised, as meetings are scheduled with the FPO and Revenue Department to discuss progress on the study phase, said Mr Julapun.
Collaborative studies may reach a conclusion, which would be forwarded to the cabinet for further consideration, he said.
“The first step to establish an NIT system is to bring everyone into the tax system, regardless of whether they fall under the taxable income threshold,” said Mr Julapun.
“The government must later establish an income measurement to set a threshold level, with a mechanism for tax refunds to assist them.”
He said if the NIT system is implemented, the government may need to amend revenue laws regarding the requirement for individuals earning income to submit a personal income tax return (PND 91 form).
The current requirement is for everyone earning 120,000 baht per year to file a PND 91 form.
A review would be needed to determine whether the income threshold should be reduced, said Mr Julapun.
The study should consider whether the NIT should be implemented, he said. If adopted, officials must examine which mechanisms it would replace, said Mr Julapun.
If the NIT can substitute for various types of welfare, officials need to determine whether to discontinue the state welfare card programme to avoid redundancy, he said.