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

secondary cause. From the late 1970s to the present, Thailand’s budget has been
in the range of 18 to 21 per cent of GDP, well below the average of around 26
per cent for middle-income countries in general (IMF, 2010: 25, table 1).

The budget is small because tax revenues are low. Over 1987–2009,
total tax revenue averaged 16.5 per cent of GDP (Pan, 2012). Cripps and Pasuk

in this volume found that the ratio of tax to GDP was low because many people
with high income and considerable assets are able to evade direct taxation.
Le, Moreno-Dodson and Jeep (2008: 31) estimated that Thailand could increase
tax revenue by 5 per cent of GDP simply by better administration, and even
further by removing tax breaks for the wealthy. Somchai Jitsuchon et al. (2011)
reckoned that increasing VAT from 7 to 10 per cent would raise a further
2.5 per cent of GDP which would be enough to upgrade current social security
systems into a comprehensive social welfare system from child subsidies to
old-age pensions, including social security for the large informal workforce.

Pan (2013) reviews a range of reforms in the tax system including a
revision of income tax exemptions, a negative income tax to aid the poor,
and wealth taxes . Several of these suggestions are now under consideration
11
by the Ministry of Finance and the government.

Conclusion: The politics of fairness

Thailand’s development has been a success in the sense of relatively high
growth rates and a reduction in poverty levels. But economic inequality rose to
a high level and has only very slightly improved, remaining higher than all of
Thailand’s neighboring countries. In the international context of a lively debate
on the negative impact of inequality, and the realization by some key figures in

11 As of 2017 no comprehensive wealth tax exists in Thailand. Property taxes are outdated and
problematic (Pan, 2014; Duangmanee 2016b).The present taxes on building and land, and on land
development altogether contributed about 1 percent of the total tax revenue in 2014, or 0.15
percent of GDP (Pan, 2014: 285). There is also a property transfer fee. Information on these kinds
of taxes are scarce. All these three taxes combined, in the early 2000, amounted to about 0.23
percent of GDP. As for the inheritance tax, it was introduced for about 15 years between 1933
and 1944. It was revived in 2015 but has so many loopholes that “it will not reduce any injustice
in the society, although it may have some psychological impact and may increase the government
revenue very slightly” (Krirkkiat, 2015: 44)

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