IF you live in Thailand and pay income tax, you are in a small minority. “Driving a cab like this, no one comes to collect taxes from me,” said one Bangkok taxi driver, who earned around Bt8,000 (US$192) a month. “And even if I wanted to pay taxes, I wouldn't know where to go to do that.”
Street vendors hawking fruit or T-shirts, house maids, families running shophouse factories in Bangkok's bustling Chinatown and go-go bar girls, who often earn more than the average civil servant, are among 80% of the labour force not paying income tax.
They are expected to declare their earnings and pay tax once a year, but few do so – leaving a potentially huge hole in the government's US$25bil expenditure budget and no one knows how big that gap really is.
“Anyone who has an answer is guessing. We don't even know who or where the tax evaders are,” said Finance Minister Suchart Jaovisidha.
Thailand's answer is to arm 5,000 new recruits at the Revenue Department with laptop computers linked to tax records and send them to stake out thousands of small, usually family-owned, businesses all over the country.
The campaign is making a difference. The government expects income tax collection to jump 13% this fiscal year to a record Bt600bil (US$14bil) – enough to turn a projected budget deficit this year into a budget surplus.
The new army of tax collectors looks for signs of wealth and cross checks the spending with tax records of income. One scheme is to scrutinise household electricity bills. A higher bill implies more air-conditioners, televisions and music systems.
The government, eager to fulfil election pledges to boost the economy with infrastructure projects, village loan schemes and subsidised health care, is keen to squeeze more tax out of its people. It wants to spend a record Bt1.03tril (US$25bil) in the next fiscal year to September 2004, up 2.3% on the current year.
And it needs tax to service public debt, now at around 50% of gross domestic product, compared to 14% before the 1997-98 Asian financial crisis.
Relying on people to pay tax voluntarily, with virtually no risk of being caught if they don't, won't generate enough cash to pay the government's bills.
“The Revenue Department can only collect income tax from company employees. For self-employed people, there is no way for the department to go after them because there is no record,” said a tax adviser at an international consulting firm.
The Revenue Department has also joined a wider war against crime, following the lead of US investigators who locked up Chicago gangster Al Capone in the 1930s for tax evasion when they could not tie him down with more violent crimes.
“We are a helping hand in defeating the bad – drugs, the mafia – but we are going in to find more money to tax,” said Revenue Department director-general Suparut Kawatkul.
But chasing tax evaders who are otherwise law-abiding has proved more lucrative. One scheme is to persuade the public to demand receipts from shops, to try to force businesses to declare higher sales in case the receipts fall into the hands of tax inspectors.
The government even set up a US$7,000 weekly lottery using shop and restaurant receipts sent in by the public as tickets.
“It's a way of creating public pressure. It makes it riskier for the shop owners to evade taxes,” Suparut said.
The success has prompted the government to predict a budget surplus of around Bt40bil this year, rather than the projected deficit of Bt175bil.
Suparut said revenue growth was outstripping economic growth, showing that people were less willing to dodge tax.
“Tax revenue is the highest it has ever been in history and it's sustainable because once people enter the system, they stay with us.” – Reuters