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Worldwide, top personal tax rates have fallen from an average of 31.3 percent in 2003 to 28.8 percent in 2008. But European Union (EU) taxpayers still pay the highest rates, at an average of 36.4 percent, followed by taxpayers in the Asia Pacific countries with an average of 34.6 percent and those of Latin America at 26.9 percent.

"At 37 percent, Thailand's top current personal income tax rate is high when compared to the Asia Pacific average of 34.6 percent.  In the current financial climate, those countries in the region with a lower personal income tax rate may find it easier to attract investors," said  Benjamas Kullakattimas, Partner and Head of International Executive Services at KPMG Phoomchai Tax Ltd.    

In a statement, KPMG said that at a country level, the highest tax rates in the world are paid by the people of Denmark, with a top rate of 59 percent for the whole six years, followed by those of Sweden, whose rate came down last year from 57 percent to 55 percent, and those of the Netherlands, who have paid 52 percent for the whole period.

Excluding those countries which levy no tax at all, the lowest EU rate is in Bulgaria, with a newly introduced flat rate of 10 percent, down from 24 percent. In Asia Pacific the lowest is in Hong Kong, with 16 percent and in Latin America it is in Paraguay with 10 percent.

Of the 87 countries surveyed, 33 have cut their rates in the past six years and only seven have a higher top rate in 2008 than they did in 2003.

Among the large western European economies, France has made the most significant cut in its rates, from 48.1 percent in 2003 to 40 percent in 2007. Germany has gone from 48.5 percent to 45 percent, having briefly stood at 42 percent in 2005 and 2006.

In the Asia Pacific region, tax competition between Hong Kong and Singapore has led Singapore to cut its rate from 22 percent for 2003 to 21 percent in 2006 and 20 percent in 2007.

But this does not tell the whole story, since both the Hong Kong and Singapore governments offer their citizens tax rebates when public finances allow. For 2007/08, these rebates were 20 percent in Singapore, capped at Sing$2000 (US$1400) and 75 percent in Hong Kong, capped at HK$25,000 (US$3200).

"Australia also cut its personal tax rate by two points to 45 percent last year,"  Benjamas said "but if the intention was to attract back high value Australian workers who have temporarily moved to Hong Kong or Singapore, it may not be enough. It is common to hear from foreign workers that once families have become accustomed to the huge increase in spending and saving power that low tax rates provide, it can be very difficult to justify going home."

In Latin America, personal tax rates have generally stayed low but stable. There is an increase in the average, from 25.6 percent in 2003 to 26.9 percent in 2008, but this is entirely due to the introduction of a 10 percent income tax in Paraguay and a 25 percent tax in Uruguay, both effective from 2007.

Elsewhere in the region, tax movements have all been down. Mexico and Panama stand out for their steady, year-on-year reductions. In the past six years, Panama has gone in stages from 33 percent to 22 percent, while Mexico has gone from 34 percent to 28 percent.

"Given that the share of national wealth taken by tax revenue in many countries is static, or has increased in the past five years, the fall in personal and corporate tax rates raises the question of how governments are now raising funds," said  Benjamas. "We think the answer may lie in increases in indirect taxation, through value added taxes, excise taxes, customs duties and fees for specific services."

"At the moment however, the Thai Government's policy is to maintain the main indirect tax (VAT) at its current level for the time being, and this seems to limit the opportunity for reductions in income tax rates," said  Benjamas.