Flood tax for Thailand : The case study of Bangkok

Abstract

Thailand has been more likely to be effected by catastrophe events especially, flooding because of geographical reason and climate change situation. From flooding event in 2011 in Thailand, according to the World Bank with the confirmation of Thai Government, flooding has affected 3,151,224 people from 1,154,576 families and damage estimated of at least 185 billion baht. Employment has been hurt when factories flooded and workers were laid off or fired. Not all factories are expected to reopen causing significant long term job loss in Central Thailand. Therefore, this study examined the issue of the public support for the provision of " a yearly tax for flood prevention scheme" . This study has estimated how much the public, the general population, would be willing to pay for supporting this particular scheme for the purpose of reducing Government budget deficit in providing national flood prevention project, targeting working population, with a yearly payment as part of their yearly income tax. This scheme would be regarded as public-private good as it would directly reduce the risk of flooding in society, if flooding occurred.

With the use of a single bounded contingent valuation method (CVM) format , a 600 sample surveyed study asked 20-60 years old taxpayers in Thonburi Bangkok to elicit their willingness to pay (WTP) to support this flood prevention scheme with an initial tax payment of either 500, 1,000, 1,500, 2,000 or 2,500 baht respectively. As for the measure of total economic benefit, this study also divided respondents according to geographic characteristics of their living place in order for designing flood tax rate with equity and efficiency manner.

The results of the probit model found that the mean WTP values for a flood prevention scheme were 1,878 baht for those who have lived in low-lying area and 1,464 baht for those who have lived in high area. In addition, personal income and the rate of tax payment were the most influential factors when individuals made their decisions on whether to sponsor this scheme. This study recommends that the Thai government should use a progressive tax with differentiated rate according to geographic characteristic to fund this scheme when a flood prevention program become available.