Thailand's government wants to legalise some underground businesses in order to tax them so it can fund higher salaries for government party officials, the AFP news agency has reported, citing a source close to Prime Minister Thaksin Shinawatra.

It is not clear what sort of illegal activities would be legalised.

The government believes that corruption would be curbed if government officials received higher salaries, the source said.

Removing corruption would also reduce companies' expenses because they would no longer have to spend vast sums on bribing officials, the source said, apparently repeating what Mr Thaksin had said in a speech to members of his Thai Rak Thai party on Sunday.

"Reform is needed to bring these underground businesses above ground so that the government can collect more tax revenue," the source said.

"The additional taxes can be used for increasing public officials' salaries and they do not have to be corrupt."

Election pledge

Mr Thaksin said the reforms could be pushed through if his party was elected to another term in office, the source said.

Thailand desperately needs to go ahead with economic and social reforms, and its bureaucracy must be shaken up, Mr Thaksin said according to the source.

He also called for reforms of Thailand's foreign policy, its education system and its legal system - including with regards to intellectual property rights.