Maybank Thailand economist Tim Leelahaphan said in his research note that changes may result in Bt20 billion in extra disposable income, ifThais started paying taxes only when annual taxable income exceeded Bt300,000 against Bt150,000 at present.

However, the Cabinet today approved an increase in several allowances but maintained the first tax brackets unchanged. This means those with taxable income below Bt150,000 would remain subject to the 5 per cent tax rate. The restructuring will take effect in the 2017 tax year.

The Finance Ministry won the approval for the increase in the expense allowance cap, from 40 per cent of income or up to Bt60,000 to 50 per cent or Bt100,000.

The personal allowance will also be doubled from Bt30,000 to Bt60,000. The maximum child allowances will also be lifted from three children, and the allowance per child is doubled to Bt30,000.

The ministry said that the restructuring aimed to address income inequality and changes in the economic condition. This is also designed to ease tax burden of salary earners. Only those earning monthly income of Bt26,000 or more would be subjected to taxation, it said.