The opposition People’s Party on Thursday pressed the government to clarify its plans for tax reform after the latter floated ideas about restructuring the system, while the government insists everything is only at the study stage with no concrete proposals made yet.
People’s Party MP Sirikanya Tansakun challenged the government on the first day of the new House sitting to clarify remarks made earlier by Finance Minister Pichai Chunhavajira and echoed by the ministry’s permanent secretary for finance about revamping the country’s taxation structure.
Even though she generally agreed with any recommendations for improving the tax structure to generate more revenue, these proposals should be supported by a sound explanation, Ms Sirikanya said.
Citing her understanding of Mr Pichai’s remarks, she said corporate tax would be lowered from 20% to 15%, and personal income tax would be made a single rate of 15% (instead of the current range of 5-35%) while value-added tax (VAT) would be raised from 7% to 15%.
While this could potentially lead to a decrease of about 190 billion baht in revenues from corporate tax, salary earners who make less than 300,000 baht a month would have to pay a higher rate of income tax, she said.
“That’s why I’m totally confused whether this idea will really help the state generate more tax revenues while having the least impact on members of the public, as promised,” she said.
“And if the government really isn’t aware of this estimated substantial revenue loss, why on earth it is considering raising VAT [apparently to compensate for the loss]?”
Mr Pichai said VAT, which has been at 7% for three decades, could rise as high as 15% — an idea that was quickly shot down by Prime Minister Paetongtarn Shinawatra.
As for a flat 15% rate for personal income tax, it would be offered to certain highly skilled people as a way to attract talent from abroad to help with economic development, the minister said. He did not suggest that the existing progressive tax rate system would be abandoned.
Ms Sirikanya said she was wondering if the government’s tax reform idea is merely an attempt to bring Thailand’s corporate tax in line with the global minimum of 15% proposed by the Organisation for Economic Co-operation and Development (OECD) for all multinationals with at least 750 million euros in annual sales.
Deputy Finance Minister Julapun Amornvivat said the ministry was in the process of studying how to generate more tax revenue to fund plans to put in place universal welfare for the poor.
Currently, Thailand’s tax revenues account for only about 14% of its gross domestic product (GDP), which is far below the global average of 18%, he said.
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