Election tax battle: Democrats’ tax-free band vs People’s VAT rise

Tax policy—covering restructuring, deductions, and changes to personal income tax allowances—has become one of the issues that voters are closely following, as political parties spell out what they would do. In the 2026 election campaign, two parties that have been particularly explicit about “tax” policies are the Democrat Party and the People’s Party.

Nation Group's Krungthep Turakij has compiled and compared the tax policy directions of the two parties.

Democrat Party: Korn proposes personal income tax reform

Korn Chatikavanij, Deputy Leader and prime ministerial candidate of the Democrat Party, said reforming the personal income tax structure is necessary to reflect today’s much higher cost of living. The party proposes raising the annual tax-exempt base to 300,000 baht.

“It is time for the state to prioritise the salaries of the middle class, because working people earning around 20,000–26,000 baht a month today find it difficult to live compared with the past. Meanwhile, the personal income tax law has not been updated for many years. We therefore propose moving the net income exempt from tax from the first 150,000 baht to nearly 300,000 baht per year,” Korn said.

Korn added this adjustment would mean that people with a salary of up to 40,000 baht would not pay personal income tax on the first portion of income, leaving working people with around 7,500 baht more per year. He stressed that the measure would benefit all taxpayers, because everyone’s first 40,000 baht would not be included in tax calculations.

He acknowledged, however, that the measure could reduce tax revenue by around 30 billion baht. He said data shows the current system is highly unequal: the top 2 million taxpayers out of around 4.4 million who actually pay tax shoulder about 90% of total personal income tax revenue. By contrast, easing the burden on the lower 2 million taxpayers would only have a small impact on state revenue.

The party also proposed maintaining the tax base to ensure the state retains full population data. Instead of paying zero tax and exiting the system, those who would have received the full 7,500-baht benefit would still pay a small amount—such as 100 baht—so they remain within the Revenue Department’s records.

Korn: Cutting corporate tax did not spur investment

The former finance minister also said that the past reduction of corporate income tax from 30% to 20% under a Pheu Thai government did not stimulate investment as theory suggests. Instead, it increased profits used to pay dividends to major shareholders—many of whom were foreign—leading to capital outflows, rather than reinvestment domestically. The party therefore wants to prioritise tax relief for individuals—“small people” in the economic system—rather than focusing on corporate cuts.

To compensate for lost revenue, Korn proposed broadening the tax base by bringing those who should be paying tax but remain outside the system into compliance, and improving the efficiency of corporate tax administration, so funds can be used for welfare in other areas.

People’s Party: Sirikanya focuses on incentives to bring entrepreneurs into the system

For the People’s Party, Sirikanya Tansakul said the party’s tax reform approach emphasises drawing entrepreneurs into the system through incentives and burden reduction, rather than enforcement.

On personal income tax, the party proposes increasing the personal allowance (the personal expense deduction) from 60,000 baht to 100,000 baht per person, to better match real living costs, which the party cites as averaging around 74,000 baht per year.

Gradual VAT increase with compensation

On value-added tax (VAT), the People’s Party proposes gradually raising the VAT rate by 1% per year, without necessarily pushing it to 10%, when economic conditions allow. The party says the policy must be accompanied by compensation measures for low-income earners.

“SME tax 3-step” linked to receipt lottery concept

For SME tax measures, the People’s Party proposes linking policies to a “receipt lottery” concept, with a three-part package aimed at addressing SMEs’ pain points—especially fear of entering the tax system:

Step 1: Raise the VAT registration threshold

Increase the annual revenue threshold requiring VAT registration from 1.8 million baht to 3.6 million baht, giving small shops more breathing space and reducing anxiety about burdensome paperwork.

Step 2: Increase the lump-sum expense deduction for individuals

Raise the allowable lump-sum expense deduction from 60% (which assumes 40% profit) to 90%, to reflect an estimated real profit margin of around 10%. This, the party says, would reduce tax burdens and make taxation more reasonable.

Step 3: Optional flat VAT

For those required to register for VAT (revenue above 3.6 million baht), offer an option to pay a flat VAT rate of 2.1% per quarter, instead of having to keep every purchase receipt to offset output VAT—an administrative burden that can be heavy for SMEs.

Additional incentives and VAT refunds

The party also proposes additional benefits and refunds. SMEs joining the programme would receive a VAT refund coupon for the first 50,000 baht, with a coupon worth 50,000 baht that could be used to offset tax or pay for business efficiency improvements, such as hiring an accountant.

“In the initial period—around the first three years—state tax revenue may fall somewhat, but the main goal is to invite people into the system so the state can see the true SME data base and support them more precisely. As these businesses grow, the state will benefit from tax revenue in the long term,” Sirikanya said.

Broader People’s Party tax agenda: “Broaden the base, simpler, fairer”

The party said it has also compiled broader tax policies on its website. For personal income tax, it focuses on “broadening the base, making it simpler, and ensuring fairness”.

It proposes:

• Bringing people into the system by ensuring 100% of formal workers (Section 33 insured persons and civil servants) file tax returns within the first year.
• Requiring every adult to enter the tax system, paying tax from the first baht of assessable income after deductions.
• Simplifying tax documents and connecting data systems, including requiring foreign work permit applications to be linked to obtaining a tax identification number.
• Increasing the personal allowance to 100,000 baht per year.
• Creating incentives for filing returns—such as giving filers priority access or special quotas in targeted programmes that are not directly tied to low-income assistance.

Amending the Revenue Code to require adults to join the system and pay tax from the first baht after deductions, raising the personal allowance to 100,000 baht, and changing savings-related deductions into a direct tax credit at the same proportion for everyone, rather than deductions from assessable income.

Land and building tax: close loopholes, reduce inequality

For land and building tax, the People’s Party aims to “close loopholes and reduce inequality”, proposing improvements such as:

• Making assessment notices primarily electronic.
• Defining the taxpayer as the owner of the land/building, except where private ownership is not permitted—then the occupier would be responsible.
• Reducing penalties: cut the surcharge rate from 40% to 10%, and further to 1% if paid before a warning notice is issued.
• Introducing a mild tax amnesty: pay only principal without surcharge, or pay surcharge at the new rate.
• Reduce exemptions for agriculture and residential use

The party proposes lowering the exemption value for agricultural and residential use from 50 million baht to 5 million baht, and addressing “artificial” land-use claims by adding land-use categories and allowing local authorities to set appropriate tax rates (such as based on town planning rules or for landlocked plots), within the legal cap (no more than 3%).

It also proposes consolidated land tax collection: taxing individuals holding 50 rai or more, or juristic persons holding 1 rai or more, at a rate not exceeding 1.5% of land value, with the Revenue Department to conduct assessments at the end of each year.

The People’s Party said many of these tax measures would require legal amendments, including the Revenue Code, royal decrees, and amendments to parts of the 2019 Land and Building Tax Act, to enable practical implementation.