Thailand Faces Urgent Need to Revamp Tax System for Aging Population
As Thailand transitions into an aged society, with 20% of its population now aged 60 and older, urgent reforms in the tax structure are necessary to address future welfare expenses. Deputy Finance Minister Julapun Amornvivat highlighted the importance of broadening the tax base to include more citizens in the fiscal system.
To support individuals with incomes below a designated threshold, the Finance Ministry is exploring a Negative Income Tax (NIT) framework. This initiative aims not to diminish existing welfare spending but to provide a sustainable solution for residents to support their livelihoods.
Mr. Julapun emphasized the need for a thorough assessment of welfare assistance budgets in light of Thailand’s demographic shift, which poses a risk of inadequate funding for elderly welfare if government support is relied upon indefinitely.
The country officially became an aged society in 2023, with approximately 13 million individuals aged 60 and older recorded as of December 31, 2023, according to the Department of Older Persons.
The NIT proposal is currently under preliminary study, which Mr. Julapun anticipates will take 1-3 years to develop fully. The Fiscal Policy Office (FPO) previously conducted research on this topic; however, recent international developments necessitate a reevaluation of earlier findings.
Initially, NIT was designed to aid individuals who had contributed to the tax system but had fallen on hard times, such as the unemployed. The modern interpretation has shifted towards supporting low-income individuals outside the current tax framework, prompting a need for updated studies and collaboration between FPO and the Revenue Department.
Mr. Julapun stated, “The first step to establishing an NIT system is to integrate all citizens into the tax system, irrespective of their income levels.” He noted that the government would need to identify an income threshold and create a mechanism for tax refunds to assist those in need.
If the NIT is implemented, modifications to existing revenue laws may be necessary, particularly concerning the personal income tax return requirements, which currently mandate filing for individuals earning 120,000 baht annually. A thorough review will determine whether this income threshold should be adjusted.
Potential discussions on whether the NIT could replace existing welfare programs, such as the state welfare card initiative, are also on the table to eliminate redundancy. As Thailand prepares for its future, these crucial fiscal reforms aim to secure a stable quality of life for its aging population.
