As Thailand approaches another general election, concerns are mounting among leaders in the business, industry, finance and academic sectors about populist cash handout promises.
Political parties often propose direct cash assistance as a short-term economic stimulus.
But experts warn that increasing welfare spending, debt forgiveness schemes and debt payment suspension for debtors, tax breaks and other such measures could magnify risks of long-term fiscal instability while failing to address structural challenges and could ultimately become a burden for future generations.
Cash handouts unsustainable
Poj Aramwattananont, chairman of the Thai Chamber of Commerce and the Board of Trade of Thailand, expressed deep concern over populist cash handout policies during election cycles.
He warned that these policies, often implemented without a clear framework, could create long-term debt for the country and fail to solve fundamental economic problems.
“The business sector does not oppose economic stimulus policies or government spending, but wants such policies to be implemented within a clear framework, including the source of funds, methods of use and assess the actual impact on the economic system,” he said at a recent debate event co-hosted by Thai PBS and the Thailand Development Research Institute (TDRI).
Poj pointed out that most cash handout funds come from the government budget or borrowing, which ultimately adds to national debt and burdens all citizens. He stressed that political parties should clearly explain the source of funding for their proposed policies.
Given current fiscal constraints, most of the budget goes towards fixed expenses and debt repayment, leaving little room for developmental work.
“Populism can be implemented, but it must be job-creating, income-generating, and future-building populism—not just handouts,” he added.
Kriengkrai Thianukul, chairman of the Federation of Thai Industries (FTI), echoed concerns about populist handout policies, describing them as a “trap for Thailand”.
He argued that the tradition of “hand out and spend” boosts short-term popularity but fails to address structural issues, creating fiscal burden and lowering investor confidence.
“The cash handout model is clear—it comes and goes quickly, but the fiscal burden remains. Thailand has used this method for so long that it has become its own trap,” he lamented.
Kriengkrai criticized poor-quality handouts for fostering a culture of dependency, with society waiting for disbursement of government funds rather than developing productivity and competitiveness.
“Handouts must be artful—if they end up causing long-term harm, they’re not the answer. Most of the money should be invested in restructuring the country.”
Distinguishing welfare from populism
Somchai Jitsuchon, director of Inclusive Development research at TDRI, explained that the line between “essential welfare” and “populism” depends on policy design, assistance goals and long-term funding sources.
Handouts are not inherently wrong if they enhance capacity, such as skill development programs that are accessible and auditable.
“If the handout ends with no skill-building or income generation, that’s a problem. But if it increases people’s capacity, it can be a successful form of populism,” he said.
Somchai stressed the importance of assisting the truly disadvantaged and reducing inequality, rather than blanket handouts that benefit the well-off more than the vulnerable.
“If you don’t consider revenue, both approaches will end up spending money. The difference is whether society accepts it and if the system is sustainable.”
He noted that Thailand was not ready yet to become a full welfare state due to its tax structure and social attitudes. Conversely, populist spending without regard to revenue also undermines fiscal stability and credibility.
The real issue, he emphasized, was not whether to “give or not give”, but to design policies transparently and comprehensively, so that society would understand who benefited and who bore the burden.
Importance of funding sources
Prof Athiphat Muthitacharoen, an economist at the Faculty of Economics, Chulalongkorn University, underscored the need for scrutiny of party policies, particularly regarding the sources of funding for tax cuts, debt write-offs and co-payment schemes.
“Tax revenue as a percentage of GDP has dropped from 17 per cent to 14 per cent.”
Despite urbanization and economic shifts Thailand’s tax-to-GDP ratio has declined due to continual tax breaks, such as the shopping tax refund scheme.
This has led to long-term revenue loss, not due to inefficiency but tax policy.
He raised the alarm about a budget deficit of 4-5 per cent of GDP becoming the norm now, while interest payments as a percentage of state revenue have reached 11 per cent, nearing the critical 12 per cent threshold for maintaining investment-grade ratings.
“If parties propose policies without addressing funding sources or fiscal risk management, those policies will not be viable,” he said.
Athiphat warned that today’s handouts would become tomorrow’s burden, especially for the middle class, who are the main taxpayers.
If taxes must be raised regular wage earners are hit first, as they are the easiest to track. “We’ve discussed bringing more people into the system for years, but the number of actual taxpayers has remained at around 4 million.”
He projected that tax increases would be unavoidable within the next four years, and urged voters to question whether a party’s tax policies would be sustainable and who would bear the ultimate burden.
With public debt nearing 70 per cent of GDP, the challenge for the next finance minister will be daunting. Interest expenses rise rapidly as debt increases, and fiscal credibility will depend on medium- and long-term strategies.
“From a creditor’s perspective, they will look at whether the interest burden relative to state income is manageable. If the new government’s plan does not align with medium- and long-term fiscal strategies, it will be very difficult to answer questions of credibility,” Athiphat cautioned.
Responding to criticism that political platforms focus too much on populist policies, Assoc Prof Yuthana Sethapramote, an economist at NIDA, said: “The policies of various parties are quite similar, but they differ in the amount of money they intend to distribute. For example, Pheu Thai Party often emphasizes cash handouts but this time they’re offering less."
"There’s no digital wallet scheme promising 10,000 baht per person anymore, because the government budget is insufficient. The policy of having a 20-baht flat fare for the entire Bangkok rapid transit train network is still difficult to implement,” he said referring to Pheu Thai’s election pledge.
Mum on tax reform
To address fiscal discipline, the Cabinet in November approved the Finance Ministry’s medium-term fiscal framework (2027-2030), which aims to bring the budget deficit down to 3 per cent of GDP by 2029.
The plan includes a value-added tax (VAT) hike, but effective implementation would depend on the government formed after the election.
The People’s Party has proposed increasing the VAT rate from 7 to 8 per cent by 2028 and to 10 per cent by 2030, but conditional on economic improvement and payment of compensation to low-income groups affected by the tax hike.
