VAT increase proposal aims to boost government revenue and improve senior benefits
A proposal to increase VAT to 10% could generate an additional 200,000-300,000 million THB annually, with plans to allocate funds to senior welfare and tax reform.
Currently, VAT is a key source of government revenue, contributing around 30% of total income, or approximately 900 billion THB annually. A proposal to raise VAT to 10% is expected to generate an additional 200-300 billion THB per year. The additional revenue would be directed into a special savings account for individuals to invest in government bonds, helping to fund increased welfare benefits for seniors.
At present, elderly citizens receive a monthly pension of only 600-1,000 THB, but the proposed increase in VAT revenue could raise this to 3,000 THB per month.
In addition to the VAT increase, the sub-committee has suggested other measures to expand the tax base and reduce tax evasion. One key proposal is to impose a tax on stock sales, which have been exempt from taxation for over 40 years. The proposal suggests a tax rate of 0.11% on the value of stock sales, which is expected to generate 16-18 billion THB annually.
Another proposal is to explore the possibility of taxing gold transactions. The value of gold traded in the market is approximately 65 billion THB per day, surpassing stock transactions, which average about 42 billion THB daily.
The committee also recommends reviving the exit tax for outbound travel, which would be charged to Thai nationals and residents of Thailand. The proposed tax is 1,000 THB per person for air travel and 500 THB for travel by land or sea, potentially generating an additional 2.8 billion THB annually.
Warit Pipitpojjanakarn, secretary of the sub-committee on finance, expressed concerns over public debt, which is expected to rise to 69.78% of GDP by 2028, approaching the 70% debt ceiling. The country has faced persistent budget deficits, especially during the COVID-19 crisis, which caused the deficit to exceed the fiscal sustainability limit of 3% of GDP. It is projected to increase to 4.4% of GDP by 2026.
He also proposed tax structural reforms to encourage savings and reduce living costs, such as raising the child tax deduction from 30,000 THB to 500,000 THB per child. He suggested establishing savings funds for children and parents to encourage long-term family savings.
Additionally, he proposed the creation of a “Thai Junior Fund” for children and a “Parents Fund” for elderly care, allowing tax deductions of up to 100,000 THB per year. There would also be adjustments to the dividend tax structure for those with annual incomes exceeding 10 million THB, moving them to a progressive tax rate.
