Ageing Thailand: Raising VAT to support the elderly not yet a policy
The government has no policy on increasing the value-added tax (VAT) from 7% to 10%, but some officials have proposed doing so to increase funds to support the elderly.
Pornchai Thiravej, director of the Office of Fiscal Economy, said the National Economic and Social Development Council had suggested that the government could increase funds necessary to support the elderly by raising the VAT from 7% to 10%.
The additional 3 percentage points could be saved and used to support retired people, the council said. However, the Finance Ministry has not drafted a policy to raise the VAT, Pornchai said.
The council has said that Thailand has about 13.5 million elderly people, about 20% of the total population, and that in one decade their number will rise to more than 18 million, or about 28% of the total population. By 2040, the number of elderly people is forecast to rise to 20.51 million, or about 31.37% of the total population.
Almost one-third of Thais will be elderly by 2040.
A significant number of elderly Thais lack sufficient funds to pay for their expenses, and their income falls below the poverty line, surveys have found.
About 34% of Thais who are old enough to retire are still working, but almost 80% of them earn less than 100,000 baht per year, indicating that they rely on other sources of income to cover the cost of living.
The main sources of income for the elderly Thais are work (32.4%), financial support from children (32.2%), and pensions (19.2%).
Slightly more than 41.4% of elderly Thais have savings of less than 50,000 baht.
Currently, only government employees have pensions that comprise at least 40% of their monthly income. Most Thai citizens who save money for retirement through social security or the National Savings Fund lack sufficient funds to cover living expenses when they are old enough to retire.
Although raising the VAT could face opposition, if the move is properly explained it may be accepted, officials have said.
