Thailand needs to integrate its entire tax system, as the country's current personal and corporate income tax rates remain higher than the international standards, according to Finance Minister Pichai Chunhavajira.
While delivering his keynote speech at ACMA Business Forum 2024 on the subject of "Shaping Tomorrow", Mr Pichai said the personal and corporate income tax rates in Thailand are relatively high compared to the country's competitors, while both forms of tax are being reduced at present and the trend is to lower these taxes to the international standard levels.
Regarding value-added tax (VAT), he noted that all countries have studied this matter, and Thailand has also conducted studies periodically.
"VAT is related to consumption; those who consume more will pay more tax than those who consume less. We cannot choose to impose higher VAT on specific groups; we must collect it equally. However, part of the VAT revenue could be used to help low-income individuals," he said.
Mr Pichai also discussed the policy for solving debt problems, saying the Finance Ministry will speed up seeking ways to assist with restructuring debt, especially debt from home and car purchases.
He noted that restructuring such debt is not easy, but if these people can survive, they will eventually return as customers of commercial banks.
Even though financial institutions are currently strong, allowing debtors to default more could weaken financial institutions, he said.
According to Mr Pichai, financial institutions have already set aside reserves for such debts or have written off these expenses from their accounts, yet they are still making a high level of profit.
Therefore, Mr Pichai said he believes that resolving financial institution debts to help clients should reduce costs for the banks.
In a related development, Mr Pichai said Thailand used to be an emerging market during the period 1980 to 1985, with the country's gross domestic product (GDP) growing at a high rate of 9-10% per year, partly due to a low base.
During that period, national investment also surged, with the investment ratio accounting for 40-50% of GDP, while currently it stands at 19 to 20%.
This has resulted in slower economic growth over recent years, with an average growth rate of 0% over the past five years. Excluding the Covid-19 pandemic period (defined as 2020-2021), Thailand's economy has grown by only 1.9% on average, despite having the potential to grow at a rate of 3.5%. If nothing is done, the country's potential could decrease, he said.
Mr Pichai also mentioned the exchange rate, saying the baht's rate affects export revenue, which account for as much as 65% of GDP.
However, this should be allowed to follow the market mechanisms, he said.
Regarding the current stock market conditions, where there is an upward trend, he attributed it to confidence in the government, which was quickly established and has clear policies addressing citizens' concerns; adjustments to investment rules, such as those related to short selling, to boost investor confidence; positive responses to the promotion of new funds in line with government policies, such as the Vayupak Fund; and the decline in tech stocks in foreign markets and a downward trend in interest rates, which affect the capital market.
"The trading volume on the [Thai] stock market once reached 80 billion baht. If we remain in a range of 60 billion to 80 billion baht, it is still possible, but we need to build confidence in the economy," he said.