Changing Thailand's Future with Tax Reform

Abstract

At present, Thailand is facing an urgent need for tax reform that can alleviate its long-term fiscal deficit, a condition that is threatening to destabilize the country's economy. The approach that should be taken to solve this problem is to raise tax revenue while simultaneously reducing economic inequality. Policy measures to be taken under this approach include the enlargement of the tax base by registering more people to pay income taxes, the reduction of unnecessary tax benefits, and the expansion of wealth-based taxes. In addition, the government should reform its expenses. In the case that the government chooses to raise tax revenue by a means that does not promote the reduction of inequality, such as raising the VAT rates, the government should make sure that its expenses prioritize improving the welfare of the poor and the disadvantaged. More importantly, for all the changes associated with tax reform to be achieved successfully, fiscal transparency is needed. Fiscal transparency helps inform people how their taxes are being spent, allowing changes associated with tax reform to be understood and accepted. Finally, tax reform also requires a reform of politics and governance. Democratic participation is needed at all levels of government to allow people the opportunity to monitor and help make decisions related to taxation. Decentralization of governance should also be pursued together with fiscal decentralization, in order to equip local governments with more resources and a better ability to respond to the diverse needs of different localities.