Land and inheritance tax on it's way in Thailand???
Ballooning public debt worrying economists
By THE NATION
Published on June 24, 2010
Economists expressed their concern yesterday about the rising public debt and urged the government to cut spending while criticising the spending on education.
Thamavit Lert-udomtham and Rungnapa Opasphanyasarn, economists at Thammasat University, and members of the Policy Watch group, presented their analysis of the government's policies over the past year. They were worried about the rising public debt and suggested the government cut its long-term expenditure plan. which is obliged for several years.
They also said that current spending, which accounts for about 70 to 80 per cent of the annual budget, is too large and has been rising every year. For example, the government has projected revenue of Bt 1.65 trillion for fiscal 2011, but current spending almost accounts for Bt1.63 trillion, or 98.79 per cent of tax revenue. This would lead to lower capital spending, which is much needed for the economy, they said.
The two economists urged the government to restructure tax, so as to raise more revenue to match rising spending. They said sin taxes - on beer, cigarettes and liquor - should be increased. Land and inheritance tax should also be introduced.
They said the government's capital expenditure should not be lower than 25 per cent of the annual budget, as more public investment is needed. Currently capital expenditure is only 12.6 per cent of the budget due to the rising public debt.
They also urged the government to spend more on social welfare in order to narrow the wide income disparity between rich and the poor. The government should have a clear plan on how to provide more social welfare to the people and the policy must be consistent.
To attract foreign direct investment, they suggested that corporate income tax be cut to 20 per cent. More investment would boost economic activities and indirectly increase government tax revenue, they said.
Supachai Srisuchart, also a member of Policy Watch, said government spending on education had missed the target. Over the past two decades, governments have tried to reform education, but implementation has not been carried out successfully due to weak institutions.
He said the quality of teachers and students is still poor though government spending on education is relatively high compared with neighbouring countries. Education accounts for about 20 per cent of the annual budget. Of the total amount, about 70 per cent of spending is at the primary education level, but student performance is relatively poor compared to students in other Asean countries.
Supachai pointed out that while the government had increased teachers' pay, it has not spend money on teacher training and development.
