Bangkok: The Senate Finance Subcommittee has raised alarms over a projected shortfall in revenue collection from three key departments in 2025, potentially leading to government deficits and borrowing challenges. The subcommittee recommends that the government prepare a careful economic plan for 2026 and consider fiscal tightening, especially in anticipation of the full impact of Trump-era tax policies.
According to Thai News Agency, Ms. Chanyanan Tiyatrakarnchai, a senator and chairwoman of the Senate Committee on Economic Affairs, Finance and Fiscal Affairs, announced the government's draft budget bill for fiscal year 2026. The House of Representatives is set to review this budget from May 28-31. The subcommittee on finance has consulted with agencies like the Revenue Department, the Excise Department, and the Customs Department regarding their concerns about the proposed budget, which has been operational since October 2024. Despite achieving targets in the first half of the year, the Revenue Department anticipates falling short in the second half due to decreased market activity and reduced business income, which could lead to a significant drop in corporate income tax revenue.
The Excise Department also faces challenges, with first-half revenues falling short and second-half projections indicating a further decline by around 610 billion baht, though only 538 billion baht is expected to be collected due to consumer trends and government policies. Similarly, the Customs Department is experiencing a shortfall, with the potential for overall tax collections to fall short by approximately 100 billion baht, representing about 3% of GDP. This potential revenue shortfall poses a risk to the national deficit and could necessitate increased borrowing, further inflating public debt.
The subcommittee also highlighted risks to the nation's GDP, which the National Economic and Social Development Board has revised to 1.8%, well below the anticipated 2.8-3.3%. Concerns were also raised about household debt, liquidity issues, and a declining agricultural economy. Thailand's agricultural GDP, typically over 700 billion baht annually, has dropped to 500 billion baht due to falling global prices for key crops like rice, rubber, and palm. Additionally, US tax measures are expected to fully impact these sectors by 2026, particularly affecting SMEs involved in meat, beef, animal feed, and computer parts.
Ms. Tiyatrakarnchai urged the government to adopt prudent economic strategies, potentially reducing the national budget by 3-4% to ensure stability. She emphasized the need for government assistance in stabilizing agricultural product prices and advocated for conservative fiscal planning. The chairman underscored the importance of planning for economic resilience and called on all agencies to exercise fiscal restraint.
Regarding the fiscal year 2026 draft budget bill, the chairman acknowledged that detailed studies are pending but noted a lack of innovative projects. She called for reform and bold changes, as regular expenditure currently consumes 70-80% of the annual budget, with project and investment budgets comprising only 20%. The prime minister's central budget allocation, exceeding those of other ministries at 600 billion baht, is hoped to be utilized effectively to stimulate economic growth.