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The International Journal of the Royal Society of Thailand
Volume XII, 2020

RD sample would rise to around 6 million baht, with a little over half derive
from unearned income.

This estimate is still on the low side as it excludes capital gains which are
a major source of wealth as the economy develops and the revised estimate of
unearned income does not correct for underestimation of income from business

and contracting or professional fees.
In view of the evidence above, we are inclined to think that the average
net income of the top 1 percent estimated from the 0.3 percent sample from the
RD data set underestimates the income of the top 1 percent of Thailand and
that the structure of income sources of the top 1 percent may look more like that
of the NLA members in Table 2 above. In other words while the RD tax data set
has more or less covered employment income in the top taxpayer population

pretty adequately, the same thing cannot be said about unearned income and
other business income of top income earners whose tax forms may or may not be
found in the top 1% ranked by reported net income.

The top 1 percent and tax due

Average tax due on the top 600 RD sample forms was 514,793 baht per
form, or 20.2 percent of net income (gross income after deduction of expenses).
This is much lower than the top marginal tax rate of 35 percent, because
deductible allowances are quite generous and there is a further tax-free band
and several lower-rate bands before the top rate is reached. Nevertheless tax
assessed on the top 600 sample forms accounted for no less than 60% of total
tax assessed on the full sample of 29,246 forms while the majority of forms on
which tax was payable had small assessments of less than 15,000 Baht each
(equivalent to a deduction of 1,250 Baht per month).

This demonstrates that aside from WHT on interest and dividends, the
PIT system has little impact on all but a rather small group of high salary-earners.
One implication is that the tax-paying group is currently too small to carry much
weight. As the need for social spending and public services and amenities
continues to put pressure on the budget, a choice may eventually have to be
made between extending the tax base to bring in higher PIT revenue or increasing
VAT and other indirect taxes that push up prices and take money from people
and families who can least afford to pay. The case for a broadly-based PIT has
to convince a wider public.

162 Towards A Fairer Personal Income Tax

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