Tax reform to increase government revenue must be seriously pursued to enhance fiscal strength, says finance permanent secretary Lavaron Sangsnit.
According to Mr Lavaron, this year the Finance Ministry must address the direction for tax reform, with efforts to increase government revenue expected within a month.
He said that if the government could collect revenue equivalent to 18% of GDP, it would allow it to begin formulating a balanced budget after more than 20 years of operating with budget deficits.
Government revenue collection currently totals 15.5% of GDP, which is lower than previous levels of around 17% of GDP.
Regarding the idea of imposing value-added tax (VAT) on businesses earning less than 1.8 million baht annually to increase state revenue and reduce the budget deficit, Mr Lavaron said the Revenue Code already provides for collecting a flat-rate tax of 2.5% for businesses earning under that threshold. However, taxpayers under this scheme would not be able to deduct VAT from output VAT for refund purposes.
He said the government's revenue for fiscal 2025 poses a significant challenge for the Finance Ministry because the Thai economy will likely be affected by the US tariff policy.
As a result, the ministry has cut its economic growth forecast for Thailand to 2.1%, from 3%.
Given these issues, Mr Lavaron said the ministry has begun to focus more seriously on revenue collection. The finance minister has held meetings with relevant agencies to assess the revenue outlook and to plan for new sources of income, he said.
The cabinet recently decided to raise the oil tax by 1 baht per litre, which is expected to increase government revenue by around 3 billion baht a month, or 15 billion baht over the remaining five months of the fiscal year.
According to Mr Lavaron, many businesses are evading VAT by splitting into smaller companies to ensure each earns less than 1.8 million baht annually, causing the state to lose revenue it should have received.
From October 2024 to March 2025, the first half of fiscal 2025, the government collected net revenue of 1.195 trillion baht, which is 2.3% higher than the target. This was mainly due to strong domestic consumption driving VAT collection and higher-than-targeted remittances from state enterprises. However, automobile tax collection fell short of the target due to policies promoting electric vehicle usage, which carry lower tax rates than internal combustion engine vehicles.
Among the three main tax departments during the first half of the fiscal year, the Revenue Department's revenue collection exceeded its target by 1.1%, while the collection by the Excise Department fell short by 7.4%, and that of the Customs Department was 6.9% below the target.