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As the title of this video suggests, we are discussing VAT in Thailand; this is the Value Added Tax. For those especially Americans, who are unaware, VAT isn't something Americans really deal with. Thailand does have this VAT. I kind of think in the back of my head it is kind of a big sales tax basically but presently the VAT is 7% here in Thailand so you will oftentimes, if you are walking by a restaurant or something, you will see a sign that says: "Spaghetti and meatballs - 100 baht", then it will be "plus, plus" which is oftentimes service and VAT and that VAT well that's 7%, it's 7% VAT. 

I thought of making this after reading a recent article in the Bangkok Post, that is the bangkokpost.com, the article is titled: The untouchable tax and again we are kind of discussing, is it possible that we could see an increase of the VAT. For those who are unaware, when VAT was actually promulgated, when the legislation that created VAT was created, the rate at the time was 10% but it was temporarily set at 7% and that temporary setting of that 7% has continued for years since. So again, Bangkok Post, bangkokpost.com, the article is titled: The untouchable tax. Quoting directly: Since the introduction of Value Added Tax (VAT) in Thailand in 1992, no government has dared to increase the rate because of concerns regarding the economic impact, the greater burden in terms of living expenses and most importantly how politically unpopular such a move would appear." Quoting further: "Over the past decade, technocrats", (always watch out when you hear the term “technocrats””) "technocrats in the Finance Ministry and the National and Economic Social Development Council (NESDC) have highlighted a growing need to raise the vat rate from 7%, but senior officials at the Ministry insist that any VAT rate hike must take account of the country's economic conditions."

A couple of things, first of all "technocrats". What does that mean? I always find it interesting, it's one of those words I think the vast majority of lay people out there just kind of presume they know what it means. What it really kind of means is like rule by technique. It is the use of technique to sort of nudge people and sort of, I won't say convince but to sort of get people to just sort of go along with things, that's how I look at the notion of technique and you can look at guys like Jacques Ellul or Jacques Attali, they were guys that talked a lot about technocracy years ago and talked about technique and how technique is sort of used by Governments to get what they want basically. Well, here it seems like they want an increase in taxes. Well, I have very little symphony for this because for two and a half years they shut down the entire economy and it was at the order of the same Government people, the same amorphous blob we call bureaucrats or bureaucracy or government, and that's primarily the reason tax revenues are way, way down because of what Government did in the first place, what they compelled us all to go through in the first place. So, I have really issues across the board with all of this discussion about going after tax. If you want to create more revenue for the country and indirectly bump up the tax base in the country, cutting taxes and getting the heck out of the economy's way is probably the better way to go for it. Increasing taxes, especially value added tax, I have always personally had a problem with Value Added Tax on a philosophical level, because the Value Added Tax is exactly that, it's a tax on value added. It is the last thing you want to tax in an economy. For example, I don't particularly agree with property tax but I at least understand the argument that property tax spurs owners, spurs people that rent it, whatever, to use the property in a productive manner. Now I don't agree that the Government has any moral right to spur people to use their property a certain way. I don't agree with that initial premise but I can at least understand the argument. There is sort of a productivity argument saying ‘well that land sitting there it is not producing anything, if we tax it, it will light a fire under the person who owns it to create some sort of value on that land that will then derive some revenue and then pay the taxes and also make the land productive’. Again, I don't agree that anyone has the right to spur you to do what they want you to do on your property, but again I can understand the argument. With the Value Added Tax, you are taxing the most important part of your economy, the place where value is added and for this reason; look I understand to an extent all Governments need Revenue in order to put on the programs that they want to put on in order to build the infrastructure that they want to build, but at the end of the day, I really question whether or not this is the best way to tax because again it taxes the most productive in my opinion part of your economy. So, do I think it is going to rise? I kind of doubt it although you know there is a lot of talk about tax lately and clearly this government is having issues with regard to revenue; I think there's no doubt about that but honestly, we, sort of the little people if you will, that had our businesses and things shut down for the period of time we had them shut down, we had to go through that, we had to live through that, okay. Now this tax issue is sort of a lagging issue, sometimes they call things a "lagging indicator" in economics, this is not a lagging indicator this is a "lagging phenomenon" because they tax you after you have created some sort of wealth that they tax you on, they do it after the fact essentially. So, what we are seeing with the Government sort of in a sense kind of saying "the sky is falling" it looks like to me, I think they are being pretty hyperbolic about "oh we're going to run out of money and things." Well, we have seen government shutdowns before around the world and did the sky fall? Not really. At the end of the day, I am not overly worried about not having a bunch of bureaucrats telling me what to do all the time. But leaving that aside, with regard to this whole thing, look at the end of the day everyone was going to go through some bad times as a result of the shutdown, as a result of the lockdown associated with COVID. The little folks, the people that had their businesses, have already gotten through it and they have moved on. Honestly it is like attaching an albatross around their neck by then turning around and whacking them over the head repeatedly for even more taxes because the Government is having problems making ends meet. Well guess what? Actions have consequences. Shutting down the economy had the consequences it had, and look if the Government is just a little underfunded moving forward, I don't see what the big issue is with that. 

Meanwhile, as we discussed in other videos, they upped the debt-to-GDP ratio here in Thailand, took on a great deal more debt, 1.5 trillion if I remember correctly from a prior article that I cited in a prior video. Okay, if you are having short falls, why not use that money? Why go after the productive economy and start messing with that Golden Goose, what's the point of that? So that is sort of where I stand on all this but one thing I am fairly certain of, I doubt we are going to see a hike in the VAT at least in the foreseeable future.