BANGKOK, THAILAND – A planned increase of value-added tax to 10 percent was expected to raise hundreds of billions of baht a year to shore up pensions and support broader tax reforms.
VAT hike seen as key revenue tool
The proposed rise in VAT to 10 percent could generate an additional 200 to 300 billion baht annually for the state budget, according to calculations by an under-commission. VAT already accounted for around 30 percent of total state revenue, or about 900 billion baht per year.
A portion of the extra VAT income was to be channeled into a special savings account through which citizens could invest in government bonds. The returns were intended to finance expanded social benefits for older people.
Stronger basic support for older people
At present, older citizens received only 600 to 1,000 baht a month in basic pension, a level viewed as inadequate amid rising living costs. With the additional VAT funds, the under-commission’s plan envisaged raising this support to 3,000 baht per month.
New taxes on stock and gold trading
To broaden the tax base, the body proposed reintroducing a levy on share sales after more than 40 years of tax exemption. The planned rate of 0.11 percent on the value of stock transactions was expected to yield 16 to 18 billion baht a year.
At the same time, officials were examining how to bring gold trading into the tax net, as daily turnover of around 65 billion baht even exceeded stock market volumes.
Return of exit tax for travelers
In addition to capital market measures, the panel recommended reviving the former exit tax for Thai nationals and residents traveling abroad. The proposal set a charge of 1,000 baht per person for air travel and 500 baht for journeys by land or sea.
These fees were estimated to generate about 2.8 billion baht annually.
Warnings over rising debt and deficits
The secretary of the finance under-commission, Warit Pipitpojjanakarn, cautioned that public debt could reach 69.78 percent of gross domestic product by 2028, coming close to the official 70 percent ceiling. He noted that budget deficits, especially during the Covid-19 crisis, had breached the sustainability threshold of 3 percent of GDP.
Deficits were projected to grow further and reach around 4.4 percent by 2026.
Relief for families and dividend tax overhaul
To encourage long-term saving and ease living costs, Warit proposed structural reforms including a sharp rise in the child tax allowance from 30,000 baht to 500,000 baht per child. The plan also envisaged creating a “Thai Junior Fund” for children and a “Parents Fund” for elderly care, with tax-deductible contributions of up to 100,000 baht per year.
Dividend taxation for income above 10 million baht would be adjusted towards a progressive rate structure to better target high earners.