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Thai Government’s Bombshell Proposal: Massive VAT Increase for Elderly Support! How Would It Impact You?

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In a statement attributed to Pornchai Thiravej, the director of the Office of Fiscal Economy, the National Economic and Social Development Council has offered a proposition that the Thai government could augment the requisite funds for supporting the elderly population. This can be accomplished by escalating the Value Added Tax (VAT) from a current 7% to a proposed 10%.

The amplification of 3 percentage points in VAT presents a realistic prospect of increased financial backing for the retired community. This upgraded revenue can be responsibly directed towards enhancing the lives of the elderly. At this current juncture, however, the proposal is solely advisory and the Finance Ministry has yet to progress towards formulating a policy to enact this VAT modification, disclosed Thiravej.

Recent data from the Council unveils a sobering statistic: There are about 13.5 million older adults in Thailand, accounting for roughly 20% of the overall populace. This demographic is heading for an upsurge in the coming decade, with projections estimating it will bolster to more than 18 million, which is approximately 28% of the collective population. In a stark projection for the year 2040, the number of elderly is conjectured to escalate to 20.51 million, constituting about 31.37% of all inhabitants. This implies that, by 2040, almost a third of Thai people will be over 60.

A worrisome analysis of this data reveals an alarming reality – a notable fraction of the aged folks in Thailand are living in precarious financial conditions, with earnings that barely scale above the poverty benchmark.

Around 34% of aged Thais who are officially of retirement age are still actively employed. A more disturbing fact is that almost 80% of these individuals draw an annual income of less than 100,000 baht. This statistical finding suggests a prevailing dependency on alternate revenue sources to afford a reasonable living standard.

Examining the key income avenues for the elderly, three leading channels emerge: employment (32.4%), familial financial contributions, primarily from children (32.2%), and pension remittance (19.2%). Alarmingly, over 41.4% of aged Thai individuals hold savings of less than 50,000 baht.

In today’s setup, salaried governmental personnel are the only beneficiaries of a retirement pension that provides minimally 40% of their monthly wages. The majority of Thai nationals who economize towards their retirement via social security or the National Savings Fund suffer from an inadequate financial buffer, which sparks a monetary crisis once they reach retirement age.

Although the proposal of inflating the VAT may stir resistance, governmental authorities affirm that if the ultimate aim is clearly articulated and the benefits lucidly delineated, the suggestion could garner favor. Consequently, despite the initial apprehension, it may be accepted and positively transform the economic landscape for the elderly population in Thailand.

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