ASEAN KEY DESTINATIONS
Thai capital gains tax proposed
Sompol Kiatphaibool, chairman of the Stock Exchange of Thailand (SET), said any change in tax regulations should be considered carefully due to the far-reaching impact.
"There are many options to consider when raising or lowering taxes. Raising value-added taxes, for instance, has been discussed for some time but has yet to be implemented. On the other hand, cutting the tax rate will certainly affect the government budget," he said.
On Thursday, Thirachai Phuvanatnaranubala, the secretary-general of the Securities and Exchange Commission, said ageing demographics and rising public social welfare spending would force policymakers to consider new sources of tax revenue.
Thailand's tax system is biased toward earned income, with personal taxes based on a progressive system for a top rate of 37 percent and corporate tax fixed at a flat 30 percent rate, he said.
"But for unearned income, the system now includes 15 percent withholding tax on bank interest and 10 percent on dividend income, and we have zero tax on capital gains [from assets]", Mr Thirachai told a conference hosted by the Federation of Thai Capital Market Organisations.
Currently, 100 workers shoulder the burden for every 13 retirees, he said, a ratio that will rise to 100 per 17 retirees within 10 years and 100 per 26 retirees in 20 years.
The Abhisit Vejjajiva government approved the idea of a land tax, but a draft law failed to be presented to parliament.
Ideas for a capital gains tax on listed securities have been floated for years but met with heavy resistance from market participants for fear of the impact on investor sentiment and liquidity.
Veerathai Santiprabhob, the SET's chief strategy officer, said tax policy must be looked at from several angles.
The lack of a land or inheritance tax may worsen problems of social disparity, he said. But from a competitive standpoint, imposing a capital gains tax would hurt the country's position relative to other markets.
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