Planned financial transaction tax axed

Finance ministry says levy on share sales could have negative impact on stock market

The Ministry of Finance has scrapped a plan to collect a financial transaction tax, saying it could have a negative impact on the stock market.

The tax was expected to bring in 14 billion baht in revenue in the 2024 fiscal year, according to calculations by Sirikanya Tansakul, a deputy leader of the opposition Move Forward Party.

The plan drafted by the ministry before the current government took office called for a tax on share sales on the Stock Exchange of Thailand by individuals at 0.11% of the value of shares sold.

The ministry wants the Thai capital market to have high liquidity and stability, high trading volume and quality and low funding costs, making it attractive for investors and companies, said Paopoom Rojanasakul, secretary to minister Srettha Thavisin, who is also the prime minister.

Capital markets must be conducive to investment through relaxed regulations, said Mr Paopoom.

In terms of listed companies, the Thai capital market must be able to compete with foreign markets, especially Singapore, he said.

The stock market still needs tax incentives to support long-term investment, which led the ministry to abandon the proposal to collect the transaction tax, he said.

“We want the Stock Exchange of Thailand to be able to grow and be the first brick in the economy, creating an economy driven by the private sector,” said Mr Paopoom.

The ministry still believes it can achieve its target revenue based on economic expansion and efficient tax collection, excluding the impact of the government’s digital wallet policy.

Mr Paopoom projected that the digital wallet scheme, which is expected to begin in February with a budget of 560 billion baht, will create more economic activity that will increase value-added and corporate income tax revenue by around 100 billion baht.

Pornchai Thiraveja, director of the Fiscal Policy Office, said the government projects revenue in fiscal 2024 of 2.787 trillion baht, up by 30 billion, with budget expenditures of 3.48 trillion baht, resulting in a deficit of 693 billion baht.