TDRI backs VAT rise to 8.5% to help fix Thailand’s budget deficit
A senior TDRI economist supports raising VAT from 7% to 8.5% in 2028 and to 10% in 2030, saying the government should act immediately to rebalance the deficit and strengthen long-term fiscal stability.
Nonarit Bisonyabut, senior researcher at the Thailand Development Research Institute (TDRI), has voiced strong support for the government’s plan to increase VAT from the current 7% to 8.5% in 2028, and subsequently to 10% in 2030, arguing that the government should not wait for the economy to improve and can implement the rise immediately.
He noted that Thailand has kept VAT at 7% since the Tom Yum Kung financial crisis, when it was reduced from 10% to cushion the economic shock. Despite multiple recoveries over the decades, no government has ever raised it back to its original 10%, which he said “should have happened long ago”.
A VAT increase, he explained, would significantly boost state revenue and help correct Thailand’s persistent budget deficit, especially after years of large-scale stimulus spending. Additional revenue could also fund social welfare improvements and other public needs.
Nonarit acknowledged that a VAT rise could impact consumers, but argued that the government has many tools to ease any short-term effects and support economic activity:
“If the government keeps saying the economy isn’t ready, we will fall into the same trap as every government before. If we don’t start now, we may never start. Waiting until everything is perfect means the rise will never happen.”
Nonarit also criticised any plan to launch Let’s Go Halves Plus Phase 2, saying the economy is already gradually recovering thanks to earlier cash injections — including Let’s Go Halves Plus, tourism stimulus schemes, and small-debt relief for those owing under 100,000 baht.
He urged the government to save fiscal ammunition for long-term economic restructuring, such as supporting SMEs and investing in infrastructure, rather than repeating short-term giveaway schemes.
Asked about the prime minister’s statement that he is ready to dissolve Parliament on December 12, one month earlier than the initial plan, Nonarit said that economically the timing “makes little difference”:
“Whether dissolution happens in December or January, the gap is only a month. It might delay certain trade talks — such as negotiations on Trump-era tariff issues — but only briefly.”
Politically, however, he said the impact could be more substantial, affecting issues such as constitutional amendments.
TDRI’s position signals strong backing for immediate fiscal reform, emphasising that VAT reform is crucial for Thailand’s long-term economic health.
