Conflict, Legitimacy and Government Reform: Equitable Allocation of ...
Conflict, Legitimacy and Government Reform: Equitable Allocation of ...
Conflict, Legitimacy and Government Reform: Equitable Allocation of ...
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54 KPI Congress XI<br />
Even though direct taxes like personal income tax are progressive, in<br />
reality only a small number <strong>of</strong> high income earners pay a high tax rate<br />
<strong>and</strong> since tax evasion is rampant, the government cannot fully collect<br />
personal income tax, rendering the progressive rate ineffectual (Supreeya,<br />
2001; Thanasai, 1994). Even though there are varied tax rates applied to<br />
different income brackets, ranging from 0%, 10%, 20%, 30% <strong>and</strong> 37%,<br />
in reality an average rate is only 5%.<br />
As a result, overall taxation system <strong>of</strong> Thail<strong>and</strong> is regressive rather<br />
than progressive.<br />
The government needs more revenue for production <strong>of</strong> public<br />
goods <strong>and</strong> provision <strong>of</strong> public services in order to effectively mitigate<br />
inequality. Most resources used by the government must come from<br />
duties <strong>and</strong> taxes. In developed countries, a proportion <strong>of</strong> taxes to GDP in<br />
percentage ranges around 40-50% but tax collection <strong>of</strong> Thail<strong>and</strong> is only<br />
17% <strong>of</strong> GDP, which is lower than middle-income countries like<br />
Thail<strong>and</strong>, e.g. Venezuela <strong>and</strong> Turkey (see Table 6). Moreover, the<br />
proportion <strong>of</strong> personal income tax is very low, that is, only 13 per cent <strong>of</strong><br />
total tax revenue while other countries range from 20 to over 30 per cent.<br />
Table 6: Percentage <strong>of</strong> tax revenue to GDP<br />
<strong>of</strong> various countries in 2007<br />
Country %<br />
Thail<strong>and</strong> 17.0<br />
Venezuela 25.0<br />
Japan 27.4<br />
United States 28.0<br />
Turkey 32.5<br />
Russia 36.9<br />
Engl<strong>and</strong> 39.0<br />
Germany 40.6<br />
Sweden 49.7<br />
Source: Ministry <strong>of</strong> Finance <strong>and</strong> Heritage Foundation, 2008