Conflict, Legitimacy and Government Reform: Equitable Allocation of ...

52 KPI Congress XI
A good taxation system must not have a huge impact on incentives,
causing fund transfer or a person’s relocation to other countries where
taxes are lower. The principle should be who needs to pay taxes must do
so according to one’s status. Moreover, those receiving much benefits
from public expenditure should be willing to pay taxes at a greater
proportion of income, compared to those receiving less benefits. So, we
should pay attention to acceptable, fair allocation of tax burden.
(Harberger, 1974: 259) Regarding this issue, a progressive taxation
system (a person with higher income pays a higher percentage of income
but taxes should not be too high and de-motivate) combined with public
expenditure that benefit everyone should be a primary goal. At the same
time, taxation system should include measures that force those with
excessive wealth to utilize their assets to generate benefits (help increase
productivity and employment), not hoarding them for speculation.
Do fiscal policies of Thailand support the poor?
Taxation system: We must consider both taxation system and
public expenditure.
Direct and indirect taxes are government’s main revenue sources.
Direct taxes are collected from individuals according to income and asset
bases, for example, personal income tax, corporate income tax, property
tax and inheritance tax (the latter two types are not prominent in our
country). Most indirect taxes are imposed on various products, such as
value-added tax, excise tax, oil tax and custom duty, and collected when
spending is made on purchase of such product.
In Thailand, personal income tax is progressive, that is, those with
high income pay a higher tax rate than those with less income; but
corporate income tax is the same rate for everyone.
Indirect taxes are collected from everyone at the same rate, no
matter whether incomes are different or not. In this case, “a poor
household may take a heavier tax burden (compared to income) because
the ratio of consumption (C) per income (Y) of poor household is higher
than rich household.” (TDRI, 1999: 1, footnote 1) Therefore, the real