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Reducing Inequality in Thailand

By David Swartzentruber
AseanAffairs  25 June 2010

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During the recent protests in Thailand, a major theme voiced by protest leaders, especially those with a Marxist-Leninist bent, was the great inequality between the rural poor and the wealthy Bangkokians.

The inequality theme was readily seized on by foreign news organizations as the raison d’ etre for the protests in practically a superficial way.

The supposed inequality in Thailand was later discussed by Professor Stephen Young, who grew up in Thailand as the son of a U.S. ambassador.

Young pointed out that the Gini Coefficient in Thailand, a statistic that measures the difference between people with different levels of income was less, meaning better, in Thailand than in other Asean countries such as Malaysia, the Philippines and Singapore. China had even more income inequality than Thailand, the professor said.

Also obscured by the protest’s incendiary leaders were proposals put forth before the protests by Prime Minister Abihisit Vejajiva to further reduce the income disparity by taxing unused land and buildings, often held by “puu yai” (big shots), at a greater rate than land that was put into use agriculturally or in some other productive capacity.

As the dust settles after the tragic events of May 19, these proposals are moving forward and have been endorsed by Niphon Pueapongsakorn, chairman of the respected Thailand Development Research Institute (TDRI).

Mr. Niphon noted that some rich people that own land plots have never paid any taxes and that this contributed to the inequalities in Thai society.

He observed that the tax would benefit the real estate development business as it would force the owners to make use of the unused property.

He also said that the additional taxes would benefit local administrations and if the money was not used properly, officials could be voted out of office.

>>  “The government should propose the draft land and building bill to the parliament as soon as possible. The taxation should be started with a low rate. This will help expand (the) taxation base of the government”. <<

He told the Bangkok Post, “The government should propose the draft land and building bill to the parliament as soon as possible. The taxation should be started with a low rate. This will help expand (the) taxation base of the government”.

The TDRI position dovetails with an earlier statement in made by Finance Minister Korn Chatikavanij that the government needed to make its tax collection function more efficient.

One would have to be considered myopic to believe that these tax measures alone, would be sufficient to address the inequities in Thai society. But combined with whatever positive can be gained from the current reconciliation proposals being floated, there is a chance that the rural poor could improve their financial status in a more sustainable manner, rather than in the form of government handouts.


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