BANGKOK — Finance Minister Pichai Chunhavajira has called for a comprehensive integration of Thailand’s tax system, citing the need to align personal and corporate income tax rates with international norms. Speaking at the ACMA Business Forum 2024, Mr. Pichai highlighted that Thailand’s current tax rates remain comparatively high, despite ongoing reductions. The government aims to bring these rates in line with global standards to enhance competitiveness.
During his keynote address on “Shaping Tomorrow,” Mr. Pichai emphasized the importance of modernizing the tax system, including the value-added tax (VAT). He pointed out that VAT, a consumption-based tax, is uniformly applied to all consumers. While acknowledging that VAT cannot be selectively imposed, he suggested that some revenue from VAT could be allocated to assist low-income individuals.
In addition to tax reforms, Mr. Pichai discussed strategies for addressing debt issues, particularly relating to home and car loans. He noted that while restructuring debt is challenging, successful debt restructuring could benefit both individuals and financial institutions in the long term. Despite strong financial institutions currently showing high profits, allowing more debt defaults could potentially weaken them. The Finance Ministry is working on measures to help resolve these debts, which could reduce overall costs for banks.
Reflecting on Thailand’s economic history, Mr. Pichai noted that the country experienced rapid GDP growth of 9-10% annually from 1980 to 1985, driven by high investment levels. In contrast, current investment ratios stand at 19-20% of GDP, and economic growth has stagnated in recent years. Excluding the COVID-19 pandemic period, Thailand’s average economic growth over the past five years has been only 1.9%, significantly below its potential growth rate of 3.5%. If current trends continue, the country’s growth potential could diminish further.
Mr. Pichai also addressed the impact of the baht’s exchange rate on export revenue, which constitutes 65% of GDP. He advocated for allowing market mechanisms to determine the exchange rate, rather than imposing controls.
On the stock market, Mr. Pichai attributed recent upward trends to increased confidence in the government’s policies and adjustments to investment rules. He noted that investor confidence has been boosted by new funds like the Vayupak Fund and improvements in market conditions, despite a decline in tech stocks globally and falling interest rates. He emphasized the importance of maintaining a trading volume in the range of 60 to 80 billion baht to sustain market confidence.
In conclusion, Mr. Pichai reaffirmed the need for systemic reforms to support Thailand’s economic growth and stability, urging continued efforts to modernize the tax system and address financial challenges.
