BANGKOK, 23 Oct 2013 Fiscal Policy Office Director Somchai Satchaphong on Tuesday revealed that the Ministry of Finance needs to revamp the entire tax structure in order to be able to accommodate the country’s increased expenditures and to balance reductions on income taxes.
Mr. Somchai asserted that any increase in tax collection will come from consumption taxes such as the value added tax (VAT) and excise tax. The current VAT rate is 7%, while its ceiling is 10%. According to Mr. Somchai, every 1% increase in the VAT will generate an additional 50 billion baht in tax revenue. However, he said any increase of value added tax must be made during a period of good economic expansion, which is expected to come by in 3-4 years.
Mr. Somchai explained that with the Thai society becoming more and more an aging society, which generates less income tax, the government needs to find revenue from other areas. With the consumption tax hikes, the country’s fiscal budget would be balanced by 2017.
Mr. Somchai also touched on the consideration being made over the adjustment of taxes on properties and buildings. He asserted that the country’s current 0.5% tax on land not being utilized is low compared to other countries’, and Thai people have been speculating on real estate on a large scale. However, he noted that any adjustments will have to be made after carefully studying adverse effects on the real estate sector.