With the dust settling on the historic takeover of Shin Corp, the purported attempt to improve Prime Minister Thaksin Shinawatra’s political image is threatening to backfire, with a growing number of critics questioning whether he has jeopardised public interests with the Bt73-billion sell-off – virtually tax-free.

Academics, non-partisan senators and opposition MPs charged yesterday that Thaksin had completely forgotten that he was prime minister from the time the Temasek takeover was conceived to when the deal was finalised and scrutinised. They said that not only did he fail to protect public interests linked to the deal, but his government also turned a blind eye to or acted dubiously on questionable practices by the parties involved.

They sharply criticised Finance Minister Thanong Bidaya as well as top officials at the Revenue Department, and Securities and Exchange Commission, among other state agencies, for serving the interests of the premier’s family at the expense of other taxpayers and minor shareholders of Shin Corp subsidiaries.

Senator Seri Suwannapanont told The Nation that the premier should have advised his family members to pay full taxes on the deal – to set a proper example for other taxpayers.

Thaksin’s children and relatives reportedly paid only Bt25 million in the form of value-added tax on stock brokerage commission fees.

Senator Chirmsak Pinthong said the Revenue Code was apparently twisted by pro-government officials to help the premier’s family avoid paying huge taxes on profits made by the share sale.

“Finance Minister Thanong Bidaya acted as if he were the chief financial officer of the Shinawatra family, rather than the finance minister, since he immediately concluded that the deal was not subject to any income tax,” the senator said.

“On the other hand, the finance minister earlier reiterated that all taxmen at revenue, customs and excise departments must ensure that they meet the target of reaping an additional Bt16.7 billion in taxes from businesses and the general public,” said Chirmsak, chairman of the Senate committee investigating corruption cases.

The Revenue Department had made several contradictory rulings on the Shin-Temasek deal to help the premier’s family, he said.

“Once, the agency ruled that the shares transferred by Thaksin and his wife to relatives were not subject to income tax. The reason was that the shares were considered as gifts and that the recipients had not earned any income as a result, even though the transfer was done outside the stock market, the capital gains from which are normally taxable.

“Then, it recently cited other clauses of the Revenue Code to justify the tax exemption for the premier’s family when these shares were actually sold to foreigners on Monday,” Chirmsak said.

Sombat Thamrongthanyawong, from the National Institute of Development Administration, said Thaksin would find it difficult as premier to persuade the public to abide by the law in paying taxes properly since his family did not set a good example.

“The deal could encourage others to evade and avoid taxes in a similar fashion. As the country’s political leader, the premier has lost his legitimacy in urging the public to pay proper taxes since he did not get his own family do so,” Sombat said.

Kiat Sithi-amorn, of the opposition Democrat Party, said the Revenue Department seemed to have reversed its role as a tax collector.

“The tax office is supposed to chase taxes for the state coffers, but in the Shin deal it did the opposite by finding loopholes for the premier’s family to avoid paying taxes,” he said.

Kiat also criticised the SEC for failing to protect minor shareholders of ShinSat and iTV, subsidiaries of Shin Corp, by exempting Temasek from having to make a tender offer to buy the rest of shares from small shareholders.

The premier’s family had also circumvented the alien business law, which bars foreigners from holding more than 49 per cent in Thai companies, he said, adding that the telecom law was also hastily enforced to facilitate the Shin-Temasek deal.

Parinya Tewanaruemitkul, a lecturer at Thammasat University, said the historic deal would create ethical problems in Thai society.

“Tax avoidance will worsen because the premier’s family has set a bad precedent. Since the Revenue Department did not do its duty, citizens have no other choice but to question the integrity of our political leader,” he said.

Sangsit Piriyarangsan, an economist, said Thaksin had acted purely as a businessman when his family cut the Shin-Temasek deal, rather than as prime minister.

Siriyasai Katasila, of the Campaign for Popular Democracy, said the Revenue Department and SEC appeared to have worked for the premier’s family – not the public good. “We’ll have to closely watch the following phases of selling off state enterprises and the third-generation mobile-phone business for any corrupt practices,” he said.