VAT increase can boost retirement savings: NESDC

The aim is to raise the VAT rate from the current 7% to 10%, with 3% of this increase being allocated as retirement savings for the population.

A recent survey revealed that 34% of elderly individuals have incomes below the poverty line, and 41.4% have savings of less than 50,000 baht. It is believed that this situation could be improved by converting the increased taxes into retirement savings.

According to Vorawan Plikamin, deputy secretary general of the NESDC, Thailand is gradually becoming an aged society, with an estimated 13.5 million elderly individuals accounting for about 20% of the population this year. By 2034, the elderly population is projected to reach around 18.38 million people, or approximately 28% of the total population and by 2040, the senior segment is anticipated to further increase to 20.51 million individuals, representing about 31.37% of the total population. This means that one in three individuals in the country would be classified as elderly.

The data also indicate that a significant number of elderly individuals in Thailand have lower incomes than expenses, and 34% of those who are retired are still working due to insufficient income. Among these, 78.3% have incomes lower than 100,000 baht per year, requiring additional sources of income beyond retirement.

Elderly individuals primarily rely on work (32.4%), financial support from their children (32.2%), and pensions (19.2%) for their livelihood. And with slightly less than half having adequate savings, the need for sufficient income during retirement is evident and underscores the societal challenge of providing for the elderly in Thailand.

While tax increases might be met with resistance, the NESDC suggests that framing it as a means to secure retirement savings could lead to better acceptance, as it would provide a safety net for the elderly while offering the government a clear source of revenue to support the growing elderly demographic in the future.