The content in this page ("Taxing Issues" by Harrison George) is not produced by Prachatai staff. Prachatai merely provides a platform, and the opinions stated here do not necessarily reflect those of Prachatai.

Taxing Issues

Nothing matches the outrage of the privileged middle class when they think they have a grievance. 

Can’t cash in your frequent flyer miles for the trip you fancy?  A violation of fundamental human rights.  No English-language soundtrack for the Thai TV broadcast of the sports programme you’ve been waiting for?  Blatant discrimination against the linguistically challenged.  All strings pulled and the munchkin still can’t get into the primary school of choice?  The end of civilization as we know it. 

Now what defines the middle-class is not their exceptional commitment to democracy (the largely middle class PAD in Thailand and anti-Morsi protestors in Egypt are happy with the overthrow of democratically elected governments).  And despite their lengthier schooling and contempt for the ‘uneducate people’ below them, they remain woefully ignorant on many subjects (including English grammar), so it’s not their collective wisdom. 

No, the middle-class are middle because of their income and wealth.  So what really gets their goat is any perceived unfair threat to their material status, like the tax system.  Voranai Vanijaka recently added to the litany of moans in his Bangkok Post column.

Of the 70 million Thais, around 38 million are of working age, he points out.  Of those, only 10 million have personal income tax numbers and only 3 million and a bit of those actually pay personal income tax.  And those 3 million hard-working patriotic tax-payers are your threatened (and rather thin) middle class.

And it is unfair, claims Voranai, because it is ‘unequal’.  This minority of a minority of a minority is expected to shoulder more than their fair share of the nation’s tax burden.

Now here Voranai gets his figures in a twist.  He claims that this victimized 3 million provides the 1.7 trillion in tax revenue that the government expects to collect in 2012-13. 

Not so.  Not even remotely so.

1.7 trillion or thereabouts is the total tax take, to which the personal income tax of the unjustly persecuted 3 million contributes about one-sixth.  This is about one half of what the government takes from corporate income tax.  And both these sums are less than the revenue from VAT, which everybody, income taxpayer or not, working age or not, has to pay.  VAT provides fully 40% of government tax income (which is not in fact all government revenue since there are also the ‘sin taxes’ on cigs and booze, profits from state enterprises and other bits and bobs).

But no matter.  Voranai’s misrepresentations do not affect the thrust of his argument which is that while he is apparently OK with the idea that people pay different tax rates between 5% and 35%, it is not ‘equal’ if so many pay nothing.

This savours of the stridency of the Tea Party in the US.  Michele Bachmann, as an example of moderate lunacy, would also require everyone to pay income tax.  She also wants no one to pay capital gains tax or inheritance tax (so why doesn’t she emigrate to Thailand and see her dreams fulfilled?).  (Incidentally, despite her years as a tax lawyer for the IRS, she is even more flaky with facts than Voranai and is regularly tripped up by the online fact-checkers.)

But you will notice that the grievances of the middle-class seem to be trained downwards, on those freeloading feckless shirkers below them.  Not on the class above them. 

Take, for example, the 600 or so Thai names among the files that the International Consortium for Investigative Journalists unearthed on secret accounts in the British Virgin Islands.  These aren’t your middle-class folks.  And it is assumed that their money is stashed away in this tax haven partly to evade tax.  Of any kind.

Now the great and maybe-not-so-good caught with their names on some very dubious company registers have all got their excuses and disclaimers ready, but I have not seen Voranai, or anyone at the Bangkok Post for that matter, think to report on this, let alone wax indignant on the ‘inequality’ involved.

And where does this hankering for equality come from?  It is a thing to be encouraged.  Societies that are more equal tend to enjoy many other benefits, like higher voter turnouts, less domestic violence, more recycling, fewer suicides – the list is impressively long, even if the causalities are the very devil to tease out.

And Thailand stands out in South East Asia as a chronically unequal society with a Gini Coefficient that remains stubbornly high.  So how can a country like Thailand ensure greater economic equality and all the benefits that seem to come with it? 

One way is to ensure that pre-tax incomes are not grossly different, which is tricky in a free market economy.  And look at the middle-class outrage when the minimum wage was raised to a level where a copy of the Bangkok Post would cost only 10% of a day’s pay.  But most countries try to achieve greater equity through another mechanism.

By, er, taxing the middle class more than the poor.

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