Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/235276
Authors: 
Muthitacharoen, Athiphat
Burong, Trongwut
Muthitacharoen, Athiphat
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8906
Abstract: 
This paper uses a panel of personal income tax return data for the population of Thai tax filers to examine how individuals respond to tax subsidy for long-term savings. We utilize the 2013 tax reform that lowered the price subsidy for long-term savings in order to obtain causal identification. Our difference-in-difference analysis illustrates that there is a considerable heterogeneity in the individual responses to the subsidy cut—with middle-income taxpayers responding much greater than their high-income counterparts. Among the middle-income group, we also find that the subsidy reduction has larger effects on decisions of smaller contributors. Our findings shed light on the heterogeneity of individual responses which are crucial for policymakers who consider an incremental change in the existing tax incentive scheme.
Subjects: 
personal income tax
tax subsidy
long-term savings
retirement savings
developing countries
JEL: 
H24
H31
Document Type: 
Working Paper

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