Thai tax reforms from 1992 to 2013: the problems of tax systems in developing countries

Abstract

AbstractTaxation is considered an important reason for the persistent inequality in developing countries. Developing countries tend to rely heavily on revenue from regressive taxation on consumption, such as the value-added tax, and fail to use progressive income taxes for revenue. Thailand is a typical case of those developing countries. Scholars argue that the median voter model does not apply to the developing countries because their ineffective income taxation results from the weak representation of the poor. A close examination of tax politics in Thailand, however, demonstrates that the low revenue from income taxation in Thailand is attributed to the strong representation of the poor rather than the weak one. This study details the process of Thai tax reform based on interviews with policymakers in Bangkok. It traces changes in the country's tax regulations and uses tax data collected at both the local and national level. Tax reforms, particularly those on income taxes after the 1997 financial crisis, have resulted in a decreased tax burden on the poor as well as the rich.