Tax scheme alone can't spur Thailand's birth rate

Tax scheme alone can't spur Thailand's birth rate
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The more children you have, the more likely you'll be poor: That was the grim slogan of a national birth-control campaign more than four decades ago. It was dire, but it was also accurate, and it remains accurate today. In the years since, the cost of rearing, educating and keeping a child healthy has steadily risen. It's the embarrassing, albeit practical, reason why many married couples forego parenthood.

The result is that Thailand, like many other countries, has witnessed a sharp drop in the birth rate, and thus the proportion of seniors in its population is swelling. We are rapidly turning into an aged society. By 2030 one in four citizens will be 60 or above.

We can take pride in successfully slowing population growth in an overcrowded world - from more than a million births a year to 760,000 as of 2010, projected to fall below 700,000 within two decades - but we've never effectively addressed the consequences of that drastic reduction.

Warranting a measure of optimism is the Finance Ministry's proposed tax adjustments to encourage parents to have babies. The Revenue Department plans to increase the tax allowance for children starting in 2017 as a way of offsetting current demographic shifts. It is too early to say whether the notion will alter the situation, but the fact that the government has begun looking for solutions is an encouraging sign.

As it stands, the personal-tax structure - like many other policies instituted during the baby-boom years - offers parents no genuine benefit.

The tax allowance of 15,000 baht to 17,000 baht (S$600 to S$680) a year for children is a drop in the ocean compared to costs, and it has remained unchanged for years.

The Revenue Department is mulling the idea of doubling that to 30,000 baht, surely a boon to struggling households but still a long way from covering actual expenses. And, again, there is no guarantee the move would help increase the birth rate.

Another measure being considered is extending the tax allowance to cover any number of children. Currently the maximum allowance is for three children. The idea is, again, to encourage couples to have more children, but it's unrealistic given that the average family had just 1.6 per offspring in 2012, and that figure has been declining since. Few couples today want to have more than three children.

You have to go back 40 or 50 years to find Thai families averaging six children.

So this concept is highly unlikely to have an impact.

Most urban couples in particular these days are sticking to one child, since even the expenditures facing a single-child family represent a daunting burden. The government must come up with fresh, comprehensive plans to support parents, beginning - as is surely obvious - in the areas of education and healthcare.

It must keep in mind the quality of family life rather than just measuring need in quantity. This is the long-term future of the country we are dealing with, and tax adjustments, however well- intended and marginally helpful, are an inadequate response to an increasingly urgent problem.

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