On top of current personal income tax woes on funds remitted from overseas, Thailand’s longstay foreigners are now being panicked by premature scares about negative income tax (NIT). Some English-language Thai news sites and social media are warning that NIT is imminent and will require all Thais, as well as foreign residents, to fill in tax forms under penalty early next year and disclose all their worldwide financial resources.
NIT is certainly being considered by sections of the Thai government, but would require a change in the law. Deputy minister of finance Julapun Amornvivat, who is in favour, said recently such a move would require “a few years” to appear formally on the statute book. The reality is that NIT is a framework for taxation and benefits, so you would need to see the details to ascertain the specifics. Nobody has access to any specifics at the present time.
Broadly speaking, NIT targets financial assistance to those with an income below a threshold determined by the government. Those below that threshold receive a cash subsidy on a sliding scale. Advocates of NIT say it will help the elderly, the unemployed and those on marginal incomes. Payments could be made easily via digital platforms such as Paotong and digital wallets. But we have no idea what the cash boundaries might be.
Another name for NIT is “workfare”. All Thai citizens earning one baht or more in a year would be required to register with the Thai Revenue Department and fill in an annual tax form. So for the first time, low-income street vendors, massage workers etc would be required to be part of the tax system. NIT means that, once their income rises above the government-stipulated level, they will become taxpayers and not tax beneficiaries.
Thus the real purpose of NIT, over time, is to increase the number of tax payers in Thailand from less than 30 percent to a near 100 percent. For example, an unemployed person who then gets a job would sooner or later earn a salary big enough to make him or her a tax payer. The finance ministry believes that the demographic time bomb – not enough babies being born – will mean that social security payments to the elderly need to be offset by widening income tax participation. Thailand is on the verge of becoming a super-aged society.
But the introduction of NIT in Thailand is not a foregone conclusion. It would initially require an increased budget allocation and would move the country strongly towards state control of the population. Any adult Thai who did not fill in a tax form annually would not receive benefits (assuming they were eligible) and would be subject to criminal penalties. Many critics of NIT also say it’s more appropriate to advanced economies than to developing countries. The implications for expats in Thailand are entirely speculative. Crunch time is years ahead. If ever.
