Yesterday, Thailand’s government denied the suggestion of boosting Value-Added Tax (VAT) from its current level at 7%, to 10%. Despite this stance, dialogue continues around this prospect, reasoned with an anticipated requirement for supplemental finances to adequately meet the burgeoning demands of Thailand’s rapidly growing senior population. The concept originated from the National Economic and Social Development Council, presented by Pornchai Thiravej, the director of the Office of Fiscal Economy. It proposes a VAT rate hike, with the potential to provide a stable source of funds to address the financial needs of the country’s retired communities. The core of the proposal being, the surfeit 3% that the VAT increment would generate would be allocated directly for the aid of elderly citizens.
Regardless of these ongoing conversations, Thailand’s Ministry of Finance holds firm, yet to announce a concrete policy intending to increase VAT, according to the government agency’s official correspondence. Despite this, the council’s research emphasizes the significant demographic challenges Thailand is on the brink of confronting. As it stands today, close to 13.5 million elderly individuals make Thailand their home, accounting for a near 20% of the country’s total population. Projections suggest that this number could spiral to more than 18 million within the next decade, making up over 28% of the overall population.
Even more significantly, by the year 2040, studies postulate that Thailand will house an elderly population of 20.51 million, equivalent to roughly 31.37% of the total populace, reporting an almost one-third of the population – as shared by Pattaya News. Pornchai notes that a substantial portion of Thailand’s elderly population currently face financial difficulties. A sizable number struggle to meet basic expenses, with their income falling beneath the poverty threshold. Alarmingly, surveys have pinpointed nearly 34% of Thais who continue to work beyond retirement. Among these, a worrying 80% earn less than 100,000 baht annually, underlining their reliance on supplemental income sources to cover necessary living costs.
Existing income streams for aged citizens in Thailand include employment (32.4%), financial assistance from their children (32.2%), and pensions (19.2%). Moreover, more than 41.4% of elderly individuals have savings amounting to less than 50,000 baht. In Thailand, only government employees enjoy the privilege of the government’s pension benefits, representing a minimum of 40% of their monthly earnings. Regrettably, for the major part of Thai citizens who contribute towards retirement savings plans such as the Social Security or the National Savings Fund, these funds often do not suffice in preserving their quality of life post-retirement.
Pornchai shared that although the proposition of intensifying the VAT rate might receive public backlash initially, he maintains optimism that with a thoughtful and thorough explanation, it could find acceptance among the masses. As Thailand readies itself to combat the upcoming demographic shift, the discovery of viable solutions to support its burgeoning elderly population stands out as imperative. Stay updated with The Thaiger’s most recent stories on our new Facebook page: CLICK HERE.
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