By The Nation News
The Finance Ministry will require nearly all Thai citizens to file tax forms starting in 2027 to implement the so-called negative income tax system, according to Finance Minister Pichai Chunhavajira.
Targeting Low-Income Groups for Financial Support
Pichai, who is also the deputy prime minister, explained that the negative income tax system would allow the government to precisely identify low-income individuals and provide financial support accordingly.
“We have a population of 67 million, but only 10 million—about 15%—are in the tax system,” Pichai said. “And only four million people actually pay taxes, which is just 6% of the population.”
Progressive Tax Rates for Financial Assistance
The negative income tax system will use progressive rates to deliver financial support to low-income individuals, addressing the issue of granting allowances to those who do not need financial help.
For example, Pichai explained, if the government sets the annual income threshold for paying taxes at 60,000 baht, individuals earning less than this, such as 20,000 baht per year, will receive financial support. The higher their income, the more financial support they will receive, up to the 60,000-baht threshold.
“This system will encourage people to seek jobs and increase their income,” Pichai added.
Streamlining Financial Support
Pichai noted that the government had been using various methods to support low-income people, including subsidies for farmers, which had once reached 60 billion baht annually but have now been reduced to 40 billion baht.
The negative income tax system will centralise all financial support into one channel, increasing its efficiency.
Planned VAT Increase to Boost Tax Revenue
In addition to the negative income tax system, the Finance Ministry also plans to raise the Value Added Tax (VAT) from the current rate of 7%, which has been in place for over 20 years.
Pichai explained that the new VAT rate would reflect the current consumption patterns of Thai consumers and noted that several neighbouring countries had already raised their VAT. For example, Indonesia now collects VAT at 12%.
“To raise VAT is to collect taxes from those who consume a lot of goods, most of whom are high-income earners. The more they consume, the more they should pay in tax,” Pichai said.
VAT Revenue to Fund Infrastructure Development
The increased VAT revenue will be allocated to developing infrastructure projects, such as mass transit systems, education, and public health, to help reduce the cost burden of these services.
Pichai also assured that if VAT is raised, the government would introduce measures to protect low-income people, such as allowing them to pay lower rates for water and electricity or use public transport for free in some cases.
This post was originally published on Basic Income Today.