Pandemic pauses plans for higher revenue collection
Finance Minister Arkhom Termpittayapaisith has expressed concerns over how a continuous drop in tax revenue collection will affect fiscal policy conduct in the long run.
As the government aims to implement a long-term fiscal expansionary policy framework, the lower revenue collection as a percentage of GDP is an impediment, said Mr Arkhom.
The revenue collection-to-GDP ratio previously stood at around 18%, but has now dropped to 14%, he said.
"We have to be more serious about reforming the government's revenue collection to generate sufficient public funds for the fiscal expansionary policy framework in the future," said Mr Arkhom.
But since the Thai economy has been severely affected by the Covid-19 pandemic, any attempt to reform the tax system has to be put on hold, he said. An initial timeline to implement tax reform is only possible after a clear economic recovery, said Mr Arkhom.
For fiscal 2021, the Revenue Department has a collection target of 2.09 trillion baht.
Revenue collection for fiscal 2020, which ended on Sept 30, tallied 1.83 trillion baht, slightly above the collection target of 1.82 trillion. However, the amount was lower than the initial collection target of 2.12 trillion baht.
A Finance Ministry source who requested anonymity said Thailand's demography is swiftly descending into an ageing society, meaning a smaller workforce and reduced tax revenue in the future.
In 2020, people aged 60 and above made up 16.8% of the total population. That segment is expected to rise to 20% by 2025.
As Thailand has a narrow tax base, there is a need to develop an e-payment system to facilitate management and administration of taxation, said the source.