Prime Minister Paetongtarn Shinawatra has joined a chorus of critics in expressing concern over the Finance Ministry's proposal to double the level of value-added tax (VAT) from the current rate of 7%.
Asked for her thoughts on the proposed new rate of 15%, she said: "I understand [the plight of the people if VAT were to be raised]."
She said Finance Minister Pichai Chunhavajira would release more details about the plan shortly.
Mr Pichai said on Wednesday that the ministry is merely studying the possibility of raising the rate.
"We are studying the global tax trend. We are looking at the potential benefits and drawbacks to ensure the best benefits for the public," said Mr Pichai, who also serves as a deputy prime minister.
VAT, a major source of government revenue, has remained at 7% since 1992. Several administrations have suggested increasing it to 10%.
Rather than giving a specific figure, Mr Pichai said public feedback must be sought first.
"We need to gather opinions from various sectors because a VAT increase would have an impact on people," he said.
Mr Pichai was elaborating on the remarks he made at the Sustainability Forum 2025 in Bangkok on Tuesday.
At the forum, he also addressed global tax trends, noting the Organisation for Economic Co-operation and Development (OECD) introduced tax guidelines stating that everyone engaged in business should pay a 15% corporate income tax.
He said Thailand should also comply and consider reducing it from the current 20%.
Regarding personal income tax, Mr Pichai said there is fierce global competition to attract skilled workers. Many countries have cut their tax rates, but Thailand still collects 35%.
However, he said that Thailand's personal income tax base remains low while its consumption tax base is quite high, requiring some adjustment.
Thailand's VAT rate is 7%, with a ceiling of 10%. Globally, VAT rates range from 15-25%.
"Consumption taxes are considered a sensitive issue. However, if we increase the rate in a reasonable and appropriate manner, it could serve as a tool to help low-income individuals. The gap between rich and poor would narrow because we would collect taxes based on the same base for everyone," said Mr Pichai.
"If we set the rate low, it means everyone pays less, and the total revenue collected would be lower. If the rate is increased, wealthier individuals would pay more according to their spending, and the overall revenue would increase. This money could be used for measures to assist low-income people and for building infrastructure to enhance the country's competitiveness."
He said the government must also consider increasing savings. As a society with an ageing population, even though Thailand has savings from social security and provident funds, these will deplete quickly once people retire.
Lavaron Sangsnit, permanent secretary for finance, said overhauling the taxation structure would require a strong political will, and it is important to consider whether the economy has made enough of a recovery first. "Good timing is important," he said.
People's Party deputy leader Sirikanya Tansakun posted comments on X opposing a VAT increase.
"Is the 15% VAT increase too much? Those who will be hit hardest are salarymen and the middle class," she said.
Thanakorn Wangboonkongchana, deputy leader of the United Thai Nation Party, also spoke out against the proposal, saying it would result in higher prices of goods and services.
On Sept 17, the cabinet approved an extension of the 7% VAT reduction for another year, aiming to alleviate the impact of the rising cost of living and boost consumer spending.
Government spokesman Jirayu Houngsub said the cabinet extended the reduction in the VAT rate of 6.3% (excluding local taxes) or 7% (including local taxes) till Sept 30, 2025.
The extension aims to mitigate the impact of rising living costs, stimulate consumer spending and boost business confidence in the Thai economy, the spokesman said.