Hard choices to be made about Thailand 'sin tax'

ACADEMICS yesterday suggested that instead of cancelling the "sin tax" funding to agencies, a limit should be placed on agencies' budgeting and spending methods to ensure transparency.

Constitution Drafting Committee (CDC) member Charas Suwanmala, said the earmarked tax should be controlled to prevent the emergence of new agencies, which could lead to politicians' misusing tax money for populist policies.

The Thai Health Promotion Foundation (ThaiHealth) and the Thai Public Broadcasting Service (Thai PBS) insisted that funding from earmarked tax was essential to ensure their operational independence, crucial to their role as public organisations.

The CDC is set to discuss the Article 190 of the charter draft and decide on earmarked taxes today and tomorrow.

Charas said he understood that the earmarked tax had many pros, but it contained some cons as well, such as the need to control specialised taxation. "The earmarked tax is very good theoretically. Its principle is to collect tax from beneficiaries to subsidise affected people. A good example is ThaiHealth, which receives funds from alcoholic drink and tobacco businesses to organise alcohol and tobacco control campaigns," Charas explained.

"However, the earmarked tax may also support overspending by some organisations as they get the funding easily. Hence, politicians might use this kind of tax to promote their populist policies, which will negatively affect the treasury system in the long term," he said.

'Control of earmarked tax'

On the expert's side, Thailand Development and Research Institute (TDRI) president Somkiat Tangkitvanich said he agreed with the economic perspective of an earmarked tax, as explained by Charas. But Somkiat suggested the earmarked tax should continue with cautious regulation. "I agree with the control of earmarked tax - but the constitutional draft has too much restriction on the tax, which is not yet comprehensive," Somkiat commented.

Somkiat said the earmarked tax regulation should be based on three principles: restriction of organisations taking funds from the earmarked tax; the limitation of funds by using an adjustable ceiling cap; and a strict spending inspection system on the organisations. "The organisations to be funded by earmarked tax should be those crucially in need to be freely operated, such as Thai PBS. The flexible ceiling cap is needed to ensure the organisations receive enough funds and the strong inspection system is to ensure transparency," he explained.

Charas reasoned that the CDC raised the earmarked tax issue to encourage financial discipline by the government through the constitution. It had no intention of compromising the independent operation of these public organisations.

ThaiHealth deputy manager Krisada Ruang-areerat said that, if the earmarked tax was strictly limited by the constitution, the work of his organisation and the others funded by this tax, would definitely be compromised.

"Since our foundation was founded, we have reduced the 1.2 million smokers' numbers and generated Bt63 billion to the government by encouraging the raising of a tobacco excise. This good work would not happen if the tobacco firms could influence us through governmental funding," Krisada said.

Thai PBS managing director Somchai Suwanban warned the freedom of its journalistic work would be affected if the cancellation of an earmarked tax was enforced. "We are fine with the tight spending monitoring, as of now the Office of the Auditor- General audits our spending. But we are the public media, so we need to keep our independence," Somchai said.