Start the debate on an equitable taxation system
Thailand needs to address the issues of tax avoidance and each individual's moral obligation to contribute to national developmentUS President Barack Obama said recently during a televised interview that he could foresee a budget deal in Congress that did not include further increases in tax rates but which focused on eliminating loopholes and opportunities to get deductions.
Raising taxes may not be an issue right now, he said. Closing the loopholes in tax collection would be more effective in ensuring justice in the tax collection system.
Obama was quoted as saying, "Can we close some loopholes and deductions that folks who are well connected and have a lot of accountants and lawyers can take advantage of so they end up paying lower rates than a bus driver or a cop?"
The US administration has recently raised taxes on earnings of more than $450,000 a year in a bid to reduce the country's massive budget deficit and make tax collection fairer for the public.
There is also a debate in Thailand over the unfavourable tax regime, which creates opportunities for abuse. However, the government has not seriously addressed this issue.
The government should have done better in raising public awareness on tax abuse. Thailand has seen high-profile cases involving tax avoidance and abuse. These include the probe into the Bt73.3-billion sale of Shin Corp shares. Last year actress Chermarn "Ploy" Boonyasak failed to evoke public sympathy after reportedly using a proxy to help reduce the amount of tax she was levied.
Certain tax-avoidance practices are legal, such as the exemption from capital gains tax on proceeds from selling shares via the Stock Exchange of Thailand. But in many cases there are loopholes and grey areas in the law that anyone wishing to avoid paying their dues quickly exploits.
There's often a thin line between tax avoidance and tax evasion. What President Obama seemed to suggest is that the wealthy are more likely to be assisted by legal experts who show them how to exploit the loopholes. High-income earners will naturally be subject to higher tax under a progressive tax system, while low- and middle-income earners receive no such assistance and therefore have to pay their taxes in full.
The wealthy might be able to legally avoid paying full taxes by following clever advice, but some cases involve dishonesty and fraud. In the worst cases, tax avoidance and abuse is linked to the underground economy. People involved in the shadow economy are naturally disinclined to disclose their income or its source. Activities in the shadow economy can include the illegal production of goods or provision of services that are deliberately concealed from the authorities to avoid full payment of tax or social security contributions, or to avoid meeting certain requirements such as labour and environmental standards.
Unfortunately, while other countries such as the US have placed tax issues high on their national agenda - as evidenced by the heated debate on tax payment that took place during the US presidential election - Thais in general don't feel as strongly about tax issues as people in those countries.
Nevertheless, all citizens should be instilled with an awareness that they have a moral obligation to pay tax to contribute to national development and the advancement of social justice. The reputation of lawyers should not be measured by the amount of money they can save for their clients through tax avoidance and evasion. News of celebrities or politicians avoiding tax should not be allowed to fade from the memory without any social sanction or without serious public discussion taking place on the subject.
After all, it is not so much the written text of the law that matters, but the intent with which it is regarded, and the public's awareness of moral obligation that makes the law sacrosanct.