PM floats idea of raising VAT to 8% but Finance Ministry disagrees

He urged the public to help shoulder the burden so that the government has more financial resources to implement projects requested by a majority of people. He said businesses should not take advantage of a higher VAT rate and should avoid raising the prices of goods and services.
The VAT rate has remained unchanged at 7 per cent for many years so it should be adjusted to bring in more revenue, Prayut said, while insisting that the government’s fiscal position remains sound.
Meanwhile, a senior official at the Finance Ministry, who asked not to be identified, said the ministry had not made a proposal to raise the VAT rate because the timing was not appropriate.
The source added that the economy had not fully recovered so it was not a good time to increase VAT.
Finance Minister Apisak Tantiworawong also said yesterday morning that the VAT rate would stay at 7 per cent this year. 
Chatrchai Tuongratanaphan, director of the Thai Retailers Association, shared the opinion that it was not an appropriate time for a VAT increase.
He said that it would affect consumers due to the higher price of goods and services, as well as other costs such as logistics and business operation expenses.
According to Chatrchai, incomes earned by middle and lower-income groups in agriculture remained relatively low due to weak farm prices.
“Today, people do not have enough money to cover their living costs. It will be a problem if the government increases the VAT at this time as it will increase their burden,” said Chatrchai.
He said the government’s infrastructure projects also had not been fully executed so benefits for the economy were still limited.
According to the VAT legislation, the ceiling for the VAT rate is 10 per cent but the government reduced the rate to 7 per cent after introducing VAT nearly 20 years ago.
Several previous governments have also considered raising the VAT rate but eventually abandoned the plans due to concerns about the negative effects on domestic consumption and the economy.
While brushing aside speculation about a revenue shortfall, Prayut said yesterday his administration had been running the country prudently.
The government had ensured that state borrowing and public debts were within legal limits, he said.
He added that, once implemented, ongoing infrastructure projects such as double railway and high-speed train projects would strengthen the economy in the long run and lead to more tax revenues for the government.