The Finance Ministry has set four targets for tax reform, aiming to boost revenue to cover expenses and deal with future economic uncertainties, says Fiscal Policy Office director-general Pornchai Thiraveja.
First, tax reform should ramp up the country's competitiveness and ensure sustainable economic growth.
The ministry will examine the overall tax structure to increase tax revenue and review tax benefit measures that cost the state coffers, he said.
Second, tax reform should align with the digital economy.
The ministry will continue to use advanced technologies to improve the tax collection process and provide more convenience to taxpayers, said Mr Pornchai.
He said the ministry already uses blockchain technology to support tax filings and value-added tax (VAT) refunds for foreign tourists.
Third, tax reform should promote the green economy by encouraging people to consume fewer products that are not environmentally friendly, said Mr Pornchai.
The ministry plans to use both tax and non-tax measures to promote the green economy, such as tax-deductible donations to environmental activities and the launch of sustainable bonds, he said.
The fourth goal is to create fair treatment in the tax system and to support children, the elderly and the disabled.
Mr Pornchai said one example of fairer treatment is the government's cancellation of the financial transaction tax waiver for share sales by individual investors trading on the Stock Exchange of Thailand.
The tax has been on the books for around 30 years, but was always waived to support market development. The draft law to repeal the waiver was approved by the cabinet last November.
However, Finance Minister Arkhom Termpittayapaisith said earlier the imposition of the tax might be delayed because of opposition from the Federation of Thai Capital Market Organizations (Fetco).
The Secretariat of the Cabinet sent back the draft law to the ministry for reconsideration following opposition from Fetco. This prompted the ministry to set up a team to consider Fetco's proposals for the law.
Mr Arkhom said he could not predict whether the law would come into force as expected by the middle of this year.
Earlier Fetco urged the ministry to abandon a proposal to collect the transaction tax, claiming the stock market still needs tax incentives to support long-term investment.
VAT INCREASE PROPOSED
Major political parties have proposed populist measures to lure voters in the general election, ranging from reducing the personal income tax to suspending debt for a certain period, raising concerns these moves could affect the country's fiscal status.
Whenever concerns about fiscal status are raised, a proposal to raise the VAT from 7% to 10% to increase revenue is brought up by parties. However, no government has made the move because of the likely effect on voters.
Kitipong Urapeepatanapong, chairman of the tax committee on the Thai Board of Trade, proposed that implementation of an increased VAT return some of the collected amount to people with low incomes to help them cope with a higher rate.
For example, the government can stipulate those with a monthly income of less than 20,000 baht receive a VAT return of 10% of their income, spending the amount on products and services exempt from VAT, said Mr Kitipong.
He said each increase of the VAT by one percentage point will generate around 60 billion baht per year for the state coffers. If the government raises the VAT to 10%, it will gain additional income of roughly 180 billion baht per year that can be used to provide aid to low-income earners, said Mr Kitipong.
Thailand set the VAT ceiling rate at 10%, but the applicable rate is 7%.
In 2021, the cabinet approved the extension of the 7% rate another two years to September 2023 to mitigate the impact of the pandemic.
He said if small and medium-sized enterprises want to gain financial aid when facing economic difficulties, they must adopt an accounting system and pay tax.
A Finance Ministry source who requested anonymity said he disagrees with some political parties' proposals to expand tax waivers to cover higher levels of personal income as it will result in fewer people making tax payments.
There are roughly 4 million individuals whose income bases are subject to tax payment, out of 11 million who file tax documents.
