TDRI offers govt advice on restructuring taxes without hurting poor

The Thailand Development Research Institute (TDRI) has offered suggestions on how the government can adjust the tax structure to boost state revenue, while minimising public impact and economic disparity.

The TDRI is a non-profit, non-governmental policy think tank focused on social and economic development issues.

Its suggestions come in response to the tax-reform strategy outlined by Finance Minister Pichai Chunhavajira on Tuesday at the “Sustainability Forum 2025” event in Bangkok.

The proposed tax reforms proposed by Pichai will cover three aspects:

• Increasing value-added tax (VAT) from the current 7% to 15-25% in line with global standards.
• Reducing personal income tax from 35% to 15% to encourage skilled professionals to work in Thailand, potentially attracting global talent to make the most of the country’s growing economy.
• Reducing corporate income tax from 20% to 15% in line with the Global Minimum Tax (GMT) framework. This aims to make Thailand more attractive to foreign investors and bring the country in line with global taxation standards.

On Friday, Somchai Jitsuchon, TDRI’s research director of inclusive development, said increasing VAT will have a widespread impact on the public as it would affect the prices of most consumer goods.

“Hiking the VAT should be done in small increments, such as 1% per time to reach 10% in five years,” he said.

“Most importantly, the increase shall not be announced in advance to prevent inflation expectation.”

Secondly, personal income tax should not be levied at a flat rate of 15%, as it would not help reduce economic disparity between high and low-income earners, said Somchai.

“Instead of lowering the tax rate, the government should focus on lowering tax reduction measures that benefit high-income earners. Meanwhile, taxes on interest and dividends can be levied at a flat rate to make the calculation easier,” he said.

As for the proposed lowering of corporate income tax to 15%, Somchai said that this should be done alongside cancelling benefits provided by the Board of Investment (BOI), in a bid to ensure equal investment support to all industries.

“BOI privileges can be turned into something else that is more useful, such as skill development programmes for workers,” he said. “Furthermore, BOI’s regulations should be streamlined to speed up processes and minimise the chance of corruption.”

Somchai added that the government must also boost its revenue by collecting taxes based on assets, such as capital gains, inheritance and windfalls.