Thailand's Finance Minister Pichai Chunhavajira may be the first finance minister under an elected government with a civilian prime minister to propose a hike to the value-added tax (VAT) rate, which has remained at 7% since 1992.
The law sets a VAT ceiling of 10%.
He also floated the idea of reducing corporate and personal income taxes to enhance competitiveness.
Shortly after Mr Pichai made his proposals, a loud wave of opposition emerged, stating it was not the right time given the sluggish economy. Raising taxes now would impact both the public and businesses, critics argued.
Eventually, this idea slowly faded when Prime Minister Paetongtarn Shinawatra dismissed the news, stating it was a study and that in some countries, discussions on raising VAT have taken up to a decade.
Mr Pichai acknowledged the sensitivity of presenting such an idea, but emphasised the need to first educate the public, as he was unsure how long he would remain in his cabinet position.
The idea of raising VAT was a hot potato that no one dared touch for a long time, despite recognising the need for an increase. The higher rate is needed due to the rising fiscal burden, resulting from a budget deficit for more than two decades.
As a result, the public debt has increased, especially after the pandemic, when it surged to 64%, compared with 41% in September 2019 before the pandemic. The ratio accelerated as government revenue relative to GDP decelerated.
Mr Pichai previously served as an advisor to former premier Srettha Thavisin and was promoted to deputy prime minister and finance minister (replacing Mr Srettha, who held both posts) after Panpree Bahiddha-Nukara resigned from his positions as deputy prime minister and foreign affairs minister.
When Ms Paetongtarn became prime minister, Mr Pichai stayed on in his roles as deputy prime minister and finance minister.
Mr Pichai's appointment as the finance minister marked a significant turning point amid tensions between the government and the governor of the central bank, as the government attempted to pressure the central bank to lower its policy interest rate.
However, with Mr Pichai's more relaxed and conciliatory approach, the situation, which had previously seemed irresolvable and caused concern in society, began to show signs of dialogue.
Eventually, the Monetary Policy Committee decided in October to reduce the policy rate by 25 basis points, marking the first rate cut in four years.
Mr Pichai, now 75, holds a bachelor's degree in commerce and accounting from Thammasat University and a master's degree in business administration from Indiana University. He also served as the chairman of the Stock Exchange of Thailand and chairman of Bangchak Corporation Plc.
