This paper looks at the effects of taxes on income distribution in Thailand making use of the 2005 data from the Bureau of the Budget and other sources. We attempt to figure out if Thai tax system is pro poor or rich (i.e. progressive or regressive) among the various tax types on the five quintile income groups. This paper is used to ascertain which income group tend to pay more of their incomes as taxes. The paper also explores the relationship between tax incidence and poverty reduction on the one hand and indicators of access to education and health services and social outcomes on the other using simple measures of association. We conclude that based on the results of the tax system, the income distribution of Thai households became more equal on individual income tax, implying a gradual effort to bridge the income gap between the rich and the poor in Thailand. A pre-tax Gini coefficient of 0.3056 saw a marginal improvement, leading to a post-tax Gini coefficient of 0.2862 on post-tax (IIT), implying the situation on post-tax individual income shows an attempt by Thai government to have equality in individual incomes, and thereby bridging the income gaps. In general, the total post-tax coefficient ended at 0.3085 indicating, though efforts are being put in place by government to enhance the income situation of the poor, the effort according to our empirical results is marginal and have even worsened the income disparity situation by increasing income inequality to another level. The result confirms the distribution of income of Thai households became more unequal, and an indicative of a tax regime which is regressive at the end. We therefore make a number of policy recommendations on the ensuing situation.
Inhaltsverzeichnis (Table of Contents)
- General Overview
- Research Questions
- Methods for Calculating Tax Incidence
- Empirical Results
- Incomes Distribution by Income Classes
- Expenditure by each income class in proportion
- Distributional Effects of Taxes by income classes
- Effective Tax Rate
- Post-Tax Income Distribution
- Policy Recommendations
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper analyzes the impact of Thailand's tax system on income distribution using 2005 data. The main objective is to determine whether the tax system is progressive or regressive across different income quintiles and to explore the relationship between tax incidence, poverty reduction, and access to essential services.
- Assessment of the progressivity or regressivity of the Thai tax system.
- Analysis of the distributional effects of various tax types on different income groups.
- Examination of the relationship between tax incidence and poverty reduction.
- Investigation of the impact of the tax system on income inequality.
- Development of policy recommendations based on empirical findings.
Zusammenfassung der Kapitel (Chapter Summaries)
General Overview: This chapter introduces the role of taxation in government revenue generation and its impact on economic stability. It highlights the increasing welfare needs and government responsibilities, emphasizing taxation as a crucial tool for balancing government expenditure. The chapter then classifies taxes into direct and indirect taxes based on the ability to shift the tax burden, explaining the two main steps in estimating tax incidence: identifying the burden bearer and allocating the burden across different income classes. Finally, it notes Thailand's reliance on indirect taxes, which can exacerbate income inequality.
Methods for Calculating Tax Incidence: While the provided text doesn't explicitly detail the methods used, it's implied that the research utilizes data from the Bureau of the Budget and other sources to analyze tax incidence across different income groups in Thailand. This likely involves techniques for quantifying the burden of various taxes (direct and indirect) and allocating that burden to specific income quintiles, which are then used to assess the overall impact of the tax system on income distribution. The methods' precise technical details are not elaborated.
Empirical Results: This chapter presents the findings of the study, focusing on income distribution before and after taxes, by income classes. The analysis likely includes measures of income inequality (Gini coefficients), allowing assessment of the tax system's effects on income disparity. It examines the impact of each tax type on the various income quintiles, evaluating their respective contributions to overall tax revenue. The findings reveal whether the tax system is progressive (the rich pay a larger share of their income in taxes) or regressive (the poor pay a larger share). Specific data regarding pre- and post-tax Gini coefficients and the impact on different income groups would be presented here.
Policy Recommendations: Based on the empirical analysis of the Thai tax system’s impact on income distribution, this chapter proposes specific policy changes to improve equity and reduce income inequality. Given the likely findings that the tax system is, at least partially, regressive, the recommendations would focus on adjusting tax rates, broadening the tax base, or implementing alternative revenue-generating policies. The suggestions may encompass changes to direct and indirect taxes and potentially consider tax reforms aimed at promoting a more progressive tax structure to alleviate income disparity and encourage social equity.
Schlüsselwörter (Keywords)
Tax System, Thailand, Progressivity, Regressivity, Corporate Income Tax, VAT, Individual Income Tax, Income Distribution, Poverty Reduction, Tax Incidence, Income Inequality.
Frequently Asked Questions: Analysis of Thailand's Tax System and Income Distribution
What is the main focus of this research paper?
This research paper analyzes the impact of Thailand's tax system on income distribution, specifically examining whether the system is progressive or regressive and exploring its relationship with poverty reduction and access to essential services. It uses data from 2005 to conduct this analysis.
What are the key objectives of the study?
The study aims to assess the progressivity or regressivity of the Thai tax system, analyze the distributional effects of various tax types on different income groups, examine the relationship between tax incidence and poverty reduction, investigate the impact of the tax system on income inequality, and develop policy recommendations based on the findings.
What methods were used to calculate tax incidence?
While the specific methods aren't detailed, the research utilizes data from sources like the Bureau of the Budget to analyze tax incidence across different income groups. This likely involves quantifying the tax burden of various direct and indirect taxes and allocating that burden to specific income quintiles to assess the overall impact on income distribution.
What are the key themes explored in the paper?
Key themes include the progressivity/regressivity of the Thai tax system, the distributional effects of different tax types (direct and indirect), the link between tax incidence and poverty reduction, the impact on income inequality, and the development of evidence-based policy recommendations.
What are the key findings of the empirical results chapter?
This chapter presents the findings on income distribution before and after taxes, by income classes. The analysis likely includes measures of income inequality (such as Gini coefficients) to assess the tax system's effect on income disparity. It examines the impact of each tax type on various income quintiles and their contribution to overall tax revenue, revealing whether the system is progressive or regressive.
What policy recommendations are made in the paper?
Based on the empirical analysis, the paper proposes policy changes to improve equity and reduce income inequality. Given a likely finding of at least partial regressivity, recommendations might focus on adjusting tax rates, broadening the tax base, or implementing alternative revenue-generating policies, potentially including changes to direct and indirect taxes to promote a more progressive tax structure.
What are the key chapters included in the research paper?
The paper includes chapters on a general overview of taxation and its impact, research questions and methodology, methods for calculating tax incidence, empirical results (including income distribution by income classes, expenditure proportions, distributional effects of taxes, effective tax rates, and post-tax income distribution), and finally, policy recommendations.
What keywords describe the research paper's content?
Key words include: Tax System, Thailand, Progressivity, Regressivity, Corporate Income Tax, VAT, Individual Income Tax, Income Distribution, Poverty Reduction, Tax Incidence, Income Inequality.
What is the overall purpose of the general overview chapter?
The general overview chapter introduces the role of taxation in government revenue and economic stability, highlighting the increasing welfare needs and government responsibilities. It classifies taxes (direct and indirect), explains the process of estimating tax incidence, and notes Thailand's reliance on indirect taxes, which can worsen income inequality.
What is discussed in the chapter on methods for calculating tax incidence?
This chapter, while not explicitly detailing the methods, implies the use of data from the Bureau of the Budget and other sources to analyze tax incidence across income groups. It likely involves techniques for quantifying the tax burden of various taxes and allocating it to specific income quintiles to assess the impact on income distribution. The precise technical details of the methods are not elaborated.
- Quote paper
- Joseph Ato Forson (Author), 2013, Tax Incidence and Poverty Reduction: Assessing the Effects of Taxes on Income Distribution in Thailand, Munich, GRIN Verlag, https://www.grin.com/document/212606
