Bangkok:Thailand's current fiscal challenges, including the debate over "sin taxes" and earmarked taxes, have prompted Mr. Supachai Jaisamut, a party-list MP and chairman of the legal affairs committee of the Bhumjaithai Party, to question if it's time to reconsider the entire tax structure. He highlighted concerns over the narrow revenue base against the backdrop of increasing expenditure demands as Thailand transitions into a fully aging society.
According to Thai News Agency, Mr. Supachai emphasized the need to address how the government can sustainably finance growing costs in healthcare, welfare, pensions, education, and infrastructure. The OECD has pointed out Thailand's VAT revenue at 3.9% of GDP is below the 6.2% average for upper-middle-income countries. Meanwhile, personal income tax revenue stands at 1.9% of GDP, indicating a narrow tax base due to various deductions. Property tax revenue is also low at 0.4% of GDP compared to the OECD average of 1.9%. However, Thailand's excise tax revenue is relatively high.
Mr. Supachai argues that true tax reform involves broadening the tax base, simplifying the system, reducing exceptions, and ensuring fairness rather than merely increasing taxes. He suggests reviewing personal income tax, corporate tax, VAT, property tax, environmental tax, and various deductions and benefits to determine their appropriateness.
He also believes that tax revenues should be integrated into the national fiscal system through a budgetary process scrutinized by parliament. This would involve changing the allocation path of revenues collected from liquor and tobacco taxes, ensuring they become government revenue within the normal budget process rather than being earmarked for specific organizations.
For effective fiscal discipline, Mr. Supachai stresses the importance of simultaneous reform in government spending. He points out that increasing taxes would be futile if government spending remains inefficient or if projects are redundant. The goal is to ensure every baht of taxpayer money truly benefits the people.
As Thailand aims to upgrade its economic and governance standards in line with OECD guidelines, Mr. Supachai calls for a comprehensive review of the entire fiscal system, focusing on creating a fair, transparent, disciplined, and sustainable fiscal system. This approach aims to secure sufficient resources for the future and avoid burdening future generations.