When
the first phase of the Abhisit government's fiscal stimulus measures
were unveiled on Tuesday there was immediate criticism. Why
only give money to workers who contribute to the Social Security Fund?...a scheme to grant a
one-off 2,000-baht allowance to eight million employees under the
Social Security Fund and 1.4 million civil servants making less than
15,000 baht per month came under the most fire yesterday (Source:
Bangkok Post, 15-01-09, link)
The first reason was pure speed, an immediate fiscal jot to the economy. It is easy to identify who these people are and quickly disburse the money.
The reasons behind the measure were explained in greater detail at the Post Forum last night. The cash grant seems more reasonable given the explanation:
1. Is actually a tax
rebate, not a cash hand out.
2. One lump sum payment of 2,000 baht, cash-in-hand. Not 2,000 per month.
3. People in the Social Security Fund (SSF) pay taxes. Want to reward them.
4. 40 million over age of 18 not in tax system.
5. The Social Security Fund (SSF) provides rich data about people who pay into the fund each month from their pay checks.
6. 15,000 per month or less is considered a low-income in SSF.
7. There are about 8 million low income people in SSF.
8. Low income: 300 baht payment into SSF per month X 6 months = 1800 baht (roughly 2000 baht)
9. Well-off people lock up tax rebates in their bank account instead spending it and increasing consumption in the economy.
10. Grants only given to people that can have their incomes easily verified and tracked. SSF allows for verification and tracking.
11. One trillion baht has been used to help farmers. People with regular salaries who pay taxes have not been helped.
12. Typically Thai households would save 30% of any increase to income.
13. Low income households save less than 10%.
14. Low income households also need an extra 2000 baht more than others.
2. One lump sum payment of 2,000 baht, cash-in-hand. Not 2,000 per month.
3. People in the Social Security Fund (SSF) pay taxes. Want to reward them.
4. 40 million over age of 18 not in tax system.
5. The Social Security Fund (SSF) provides rich data about people who pay into the fund each month from their pay checks.
6. 15,000 per month or less is considered a low-income in SSF.
7. There are about 8 million low income people in SSF.
8. Low income: 300 baht payment into SSF per month X 6 months = 1800 baht (roughly 2000 baht)
9. Well-off people lock up tax rebates in their bank account instead spending it and increasing consumption in the economy.
10. Grants only given to people that can have their incomes easily verified and tracked. SSF allows for verification and tracking.
11. One trillion baht has been used to help farmers. People with regular salaries who pay taxes have not been helped.
12. Typically Thai households would save 30% of any increase to income.
13. Low income households save less than 10%.
14. Low income households also need an extra 2000 baht more than others.
In fact there are a lot of people in rural areas with decent sized incomes who pay no income taxes at all.
The business plan of the rural door-to-door retailer Singer is based on this very idea. They find credit worthy individuals with decent incomes who pay for products through monthly installment payments. This include some vegetable sellers in the local market:
...if you purchase from
the hypermarkets you will need to provide a lot of documents. You have
to remember that there is a large population in Thailand willing to buy
and having the money to do it but does not have the required paperwork,
and I know this because I did canvass to fully understand the market,
the majority of the population does not have the paperwork, but if you visit a potential customer and
see a nice house, a good car, making money selling vegetables,
this potential customer should not be rejected (Source: Bangkok Post,
business, 05-09-08, link)]
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