PUBLISHED : 28 Aug 2023 at 04:30
The Finance Ministry has denied it will raise the Value-Added Tax (VAT) by 3% to reserve more money for elderly savings.
Ministry spokesman Pornchai Theeravej said the ministry has no plan to increase VAT from the current 7% to 10%.
Mr Pornchai, who also directs the ministry’s Fiscal Policy Office, was responding to reports that a raise was being considered by the ministry to fund elderly savings.
On Friday, Worawan Plikhamin, deputy secretary-general of the Office of the National Economic and Social Development Council, told a seminar that various models for elderly savings were being discussed at the ministry.
One model, proposed through the council and the Social Reform Committee, suggests raising VAT to 10% via a special law. The increment would go to an elderly fund to be used during retirement.
Ms Worawan said that normally, a VAT hike is bound to spark public opposition. However, it was believed that such a tax increase would boost elderly savings and eventually be accepted by the general public.
She said people would enjoy greater financial security in their old age while the government would also have a clear source of income to create a safety net for the elderly. Financial security will become increasingly vital in the future as the elderly population grows, she said.
Ms Worawan added the government’s proposed replacement of the universal welfare payment with the elderly allowance scheme should come with a clear set of criteria to establish who would be eligible.
The government has defended its new requirements for those receiving the elderly allowance, a move that replaces universal welfare payments for seniors. It said universal welfare payments were too great a burden on the state coffers and that some targeting is needed.
Ms Worawan said that before the criteria are introduced, the government must ensure they are suited to the needs of the elderly.
She said a survey of incomes earned by the elderly showed that 34% were retirees who still worked, including those below the poverty line.
Most had an income of less than 100,000 baht per year and relied on financial support from their children or the monthly old-age allowance, Ms Worawan said.