Thai PM Paetongtarn dumps adjusting 7%VAT to 15% VAT plan
Opposition MP suggests finance minister to outline tax reform plans
Prime Minister Paetongtarn Shinawatra has scrapped a plan to hike value-added tax (VAT) following public backlash after her finance minister floated the controversial idea.
“No VAT adjustment to 15%,” Ms Paetongtarn posted on X, formerly Twitter, on Friday.
The decision was made after a meeting with Finance Minister Pichai Chunhavajira and her advisory team at Government House.
The government faced a barrage of criticism after Mr Pichai, who is also a deputy prime minister, suggested on Tuesday that VAT could jump from the current 7% to 15%.
Even Ms Paetongtarn was not impressed with the idea, admitting a day later that it would affect the public.
The prime minister said the Finance Ministry is still reviewing tax structure reforms to address social inequality and enhance competitiveness, though she did not provide further details.
VAT, a major source of government revenue, has remained at 7% since 1992. Several administrations have proposed increasing it to a ceiling of 10%.
The finance minister also indicated support for reducing corporate income tax from 20% to 15% to align with other countries and lowering personal income tax from 35% to woo skilled workers amid strong global competition.
People’s Party MP Sirikanya Tansakun said on her X account that she was not surprised by the U-turn on the VAT issue.
Ms Sirikanya said the ideas on other tax matters, including personal income tax and capital gains tax, are still unclear.
“Mr Pichai should hold a press conference to clearly outline plans for tax system reform for public benefit,” she wrote.
The United Thai Nation, a military-backed party in the ruling coalition, also opposed a VAT increase, saying it will boost prices of goods and services and hurt the poor.
Thailand’s tax-to-GDP ratio has remained more or less stagnant around 17% since 2007, below the Asia and Pacific average of 19% and 34% for the Organisation for Economic Co-operation and Development (OECD) member countries, according to the organisation.
VAT made up about 25% of Thailand’s total tax collection in 2022, according to OECD estimates.
Neighbouring Indonesia is planning to raise VAT to 12% from 11%, starting next year.
Source: https://www.bangkokpost.com/business/general/2915171/paetongtarn-dumps-15-vat-plan
