The Federation of Thai Industries (FTI) has warned the government that its controversial idea to impose value-added tax (VAT) on businesses earning less than 1.8 million baht a year could lead to more struggles at a time of economic uncertainties.
Now is not the right time to ratchet up revenue collection when the country is struggling to deal with economic challenges, said Kriengkrai Thiennukul, chairman of the FTI.
Businesses with revenue of less than 1.8 million baht a year are mostly small and medium-sized enterprises (SMEs), many of which have not fully recovered from the impact of the pandemic, he said.
"Adding VAT will only add a financial burden to SMEs that face strong competition and unpleasant prospects for the global economy," said Mr Kriengkrai.
Many countries are likely to face a recession if US President Donald Trump's reciprocal tariffs are enforced, he said earlier.
Trump decided to slap a 36% tariff on Thai imports in response to Thailand's trade surplus with the US. The new levy was set to start on April 9 but was delayed for 90 days, allowing the two countries to negotiate.
The tariff impact and growing concerns over a slowdown in the tourism industry mean the government should not implement any policies that will worsen the economy, said Mr Kriengkrai.
Thailand has been plagued by a high level of household debt and weak consumer purchasing power, which have already affected many industries, especially car manufacturing.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) recently downgraded its GDP growth projection for 2025 to a range of 2-2.2%, down from 2.4-2.9%.
Exports should expand by 0.3-0.9%, down from 1.5-2.5%, while inflation is expected to tally 0.5-1.0%, a decrease from 0.8-1.2%, according to JSCCIB.
"These projections has yet to include the impact of the 36% tariff, in case negotiations fail," said Mr Kriengkrai. "If the new steep tariff is applied, Thai GDP will plunge."
He said he understands the government needs to increase revenue after missing the revenue target in fiscal 2024, but authorities should carefully consider the impact on businesses facing a volatile economy.