Analysis of the Tax Reduction Policies Effects within the 12th National Economic and Social Development Plan, with a dynamic stochastic general equilibrium model
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Abstract
The objectives of this research are 1) To study the economic effects from tax reduction policies 2) To study the economic multiplier changing in accordance with tax reduction policies, and 3) To analyze the appropriate alternative fiscal measures in each period. This model is applied with quantitative research, collected quarterly secondary data during 2017-2021 from the Office of the National Economic and Social, Bureau of the Budget, The Comptroller General's Department, Bank of Thailand, Ministry of Labor, National Statistical Office, and the Revenue Department. Analyzed with a dynamic stochastic general equilibrium model, with approximating Bayesian parameters. The research found 1) Personal income tax reduction was the most positive variable in the model, so, the relevant authorities should consider reducing the personal income tax as the priority. 2) Household consumption and private investment were gross demand driver in the short, medium, and long term. 3) Personal income tax reduction was the most positive multiplier for household consumption and private investments, except corporate tax reduction will cause the private investment multiplier to increase in the short term. Stakeholders can apply this research result as a part of their further alternative fiscal policies
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