THE International Monetary Fund (IMF) Staff Report on Thailand advised the Southeast Asian nation's Government to front load fiscal stimulus in Financial Year 2020. Dated Oct 07, 2019, the report stated that Thailand has some fiscal space and staff recommends a frontloaded increase in public investment over and above the 5-year scaleup (from 5.4% to about 6.4% of GDP) already assumed in the baseline.

The report added that with the export outlook uncertain due to trade tensions and risks to the current domestic demand recovery growing, the authorities should push ahead with public investment projects with a high multiplier impact. Assuming that they are financed with public debt to maximize the short-term impact on domestic demand, these projects would add about one-and-a-half percentage points in fiscal stimulus and about 1 percentage point in annual real GDP growth during 2020–21. Long-run real GDP would also increase by about one-fourth to one-half percentage points as public and private investment add to the capital stock and productivity. The impact on the public debt ratio, an additional 2 percentage points of GDP, would leave public debt at 47 percent by 2024.

Thailand embarked on a number of tax reforms to increase revenue. A case in point is the enforcement of the new Land and Property Tax Law. Another instance in point is the revision of the taxation of investment income from bonds through mutual funds. Yet another example is The E-payment Law, which would be effective from the beginning of 2020. It would prevent local online vendors from avoiding income tax payment. The Report noted that the authorities have started implementing measures to improve revenue administration, notably revisions to the personal income tax code and the enactment of a new law that allows the Revenue Department to access bank information on accounts with high transaction frequency.

The Report suggested that in the medium term, once domestic demand has strengthened, tax policy reform should include a broader coverage of personal income, wealth, corporate income, and energy-related taxes, as well as a higher VAT rate. The authorities are currently working on revenue-neutral changes in tax policy that would allow for a more efficient and growth-friendly tax system. In another report on Thailand's ‘Financial System Stability Assessment', the IMF suggested that the Government should revisit tax incentives in the pension sector. In this regard, the report stated that the Thai system offers the same tax benefits to an individual pension plan (retirement mutual plan (RMF)) as it does to a collective plan (private voluntary provident fund (PVD), giving company executives a disincentive to create collective schemes. Revising this incentive structure would help increase participation in thesystem and meet the needs of an ageing population.