The Revenue Department has decided to shelve plans to overhaul the personal income tax system for now.
Director-general Satit Rungkasiri said the department will wait for clearer data on the impact of already-approved cuts in the corporate tax system before considering any changes to personal income tax.
The Yingluck Shinawatra government last year approved a cut in the corporate income tax rate from 30% to 23% this year and 20% next year.
The Revenue Department said the rate cut has reduced corporate tax receipts by 20%.
While the department has made some strides in expanding the tax base, corporate tax receipts have dropped by about 13% from last year.
"If we move ahead and cut personal income tax too, then the risk is it will cause government revenue to fall even further," said Mr Satit.
He said the department will wait to assess the impact of the corporate tax cuts on the fiscal 2013 budget before considering any changes to the personal income tax system.
Fiscal 2013 began last month and ends next Sept 30.
For fiscal 2012, the Revenue Department collected 1.62 trillion baht in taxes.
That includes 544 billion baht in corporate taxes, down by 5.2% from the previous fiscal year.
For the current budget year, the department has a revenue target of 1.77 trillion baht or 80% of total projected government revenue.
Mr Satit said the reduction in the corporate tax rate to 20% in 2013 will cause tax revenue to decline by some 100 billion baht from 2011.
But new public investment next year should help boost economic growth, corporate profits and ultimately tax revenue, he said.
The government has already approved new investment of 350 billion baht for water management and flood prevention programmes through mid-2013.
It is soon expected to finalise plans to invest 2 trillion baht in new infrastructure over the next several years.
The Revenue Department had previously floated an idea to expand the current five-tier personal tax system to offer greater tax relief to middle-income earners.
Currently, taxable income of up to 150,000 baht a year is exempt from taxation, with the next 350,000 baht subject to a tax rate of 10%.
Income from 500,001 to 1 million baht is taxed at a rate of 20%, 1-4 million taxed at 30% and over 4 million at 37%.
The proposed changes would see rates of 15-25%, resulting in lower overall taxes for many middle-class taxpayers.
