Economic downturn and stagnant auto industry revenues prompt a cautious warning from the Finance Ministry, foreseeing a potential revenue deficit by 2025.
The first half of fiscal year 2025 has seen a mixed picture for government revenue collection. While the total tax surplus of companies and state enterprises remains unclear, municipalities and districts in the same period reported a surplus of approximately 65 billion Czech koruna, the second-highest since 1993.
Elsewhere, the situation is less rosy. In Thailand, government revenue collection is predicted to fall short of the 2.88 trillion baht target by tens of billions of baht. The Revenue Department has collected 1.82 trillion baht in the first ten months of the fiscal year, 0.6% below its target. The Excise Department and the Customs Department have also fallen short, collecting 446.7 billion baht and 95.3 billion baht respectively, 11.2% and 6.2% below their targets.
Value-added tax (VAT) from imports and corporate income tax collections are facing challenges due to increased use of bonded warehouse privileges and sluggish corporate earnings. Automobile tax revenue has been affected by the government's electric vehicle promotion scheme, reducing combustion engine cars paying tax.
State enterprises have remitted 157 billion baht, which was 17 billion baht (12.2%) above target. However, revenue collections from state enterprises and other government agencies are also below target, with specific figures unavailable.
Slower economic growth is the primary reason for the revenue shortfall. The Fiscal Policy Office projects GDP expansion for the year to be 2.2%.
Despite the shortfall, the government plans to rely on fiscal tools and sufficient liquidity from the existing treasury balance, avoiding the need for additional borrowing. The Finance Ministry has measures in place to ensure the budget will be closed by September 30, 2025.
Interestingly, only 10% of those filing personal income tax returns are liable for tax, while a further 17% file but pay nothing. As much as 73% of working-age Thais with income do not file personal income tax returns at all, remaining outside the tax system.
Other government agencies have exceeded their targets, collecting 151.2 billion baht, exceeding the target by 17.4 billion baht (13%). Raising the VAT rate has emerged as a proposal under consideration to generate an additional 70 billion baht in state revenue.
The treasury currently holds 405 billion baht. It remains to be seen how the government will navigate the remaining months of fiscal year 2025 to meet its revenue targets.
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