Global trends are shifting towards reducing income taxes and increasing consumption and wealth taxes, according to finance permanent secretary Lavaron Sangsnit.
In a recent lecture to National Defence College students, Mr Lavaron said if the value-added tax (VAT) is raised in the future, it would be implemented gradually, along with measures to mitigate the tax impact.
"Many countries have adopted mitigation strategies. When taxes are raised in one area, compensatory measures can support vulnerable groups, aiming to reduce the impact of consumption tax increases," he said.
"Is raising the VAT sufficient in terms of tax structure reform? The answer is no because a key objective of taxation is to reduce income inequality between high-income and low-income earners. This means a wealth tax must be introduced. In the past, implementing such a tax was challenging because the very wealthy could manage their assets globally. Previously, taxation focused only on assets within Thailand, which were easier to track. But the wealthy can invest worldwide and we have never been able to track their assets held abroad."
However, Thailand recently became a member of the international tax information exchange network, which enables the Thai Revenue Department to access the income data of Thais in other countries.
Under this agreement, revenue authorities worldwide exchange income information. For instance, foreign revenue departments must report the income of Thai citizens to the Thai Revenue Department, and vice versa, ensuring a reciprocal exchange of information.
As a result, income and assets held abroad are now visible, potentially enabling the taxation of previously untaxed income.
Therefore, Mr Lavaron said a wealth tax is no longer an unattainable dream if we consider a new tax structure where income tax rates are likely to decrease to promote investment and attract high-potential individuals to work in Thailand.
Simultaneous hiking of consumption and wealth taxes could enhance the efficiency of tax collection, he said.
"We must acknowledge the global tax rules have changed, and Thailand cannot operate in isolation. I believe well-balanced tax reform in the future is achievable," said Mr Lavaron.
Previously the Fiscal Policy Office proposed tax structure reform to generate revenue for the government, enhance debt repayment capacity, and address declining government income caused by changes in the economic structure and consumer behaviour. The proposal included a review of various tax exemptions and deductions, as well as measures to reduce energy-related living costs, ensuring they are necessary and beneficial.