Thammasat University economics lecturers have thrown their support behind a land and buildings tax and hiking value-added tax (VAT) to boost state coffers and stabilise the fiscal budget.
They also urged the government to lift fuel prices in line with global prices.
A land and buildings tax should be put on the front burner as it is an important instrument in systemising land resources, as well as increasing efficiency of land usage and tax collection to give local administrations more funding to develop local areas, Prof Sakon Varanyuwatana, dean of the economics faculty, told a seminar yesterday entitled "Thai Economic Policies Under the New Government: Do's and Don'ts".
He also agreed with raising the present 7% VAT to the ceiling of 10% once the economy improved.
If the government is concerned that the VAT hike will take a toll on consumption, it should consider easing the burden of tax payments by cutting other taxes or widening the 60,000-baht limit of tax allowances for personal income tax to offset the impact from raising VAT, Prof Sakon said.
"I support imposing a land and buildings tax and a VAT hike. VAT contributes the highest revenue to the government, followed by corporate income tax, personal income tax and excise tax. The government's revenue will increase if it can raise VAT. At present, fiscal policy is at risk as the tax revenue stream is quite volatile and the government then needs to borrow and this could increase the burden on people. Collected revenue has been used to repay debts instead of developing the country," he said.
The Finance Ministry's Fiscal Policy Office earlier proposed setting the ceiling rate of a land and buildings tax for unused land and those for commercial purposes at 4%.
For unused land, the rate will be doubled every three years but not exceed the maximum level of 4% of appraised value.
The maximum rate for agricultural use will be 0.5% and 1% for residential use.
Meanwhile, Praipol Koomsap, a former member of the Bank of Thailand's Monetary Policy Committee and ex-dean of Thammasat's economics faculty, urged the government to lift subsidies and raise the price of all fuels to be in line with the global prices albeit gradually.
If the subsidy remains, behaviour in consuming fuels will not change, he said.