By Orathai Sriring and Pairat Temphairojana

BANGKOK (Reuters) - "Want to win a million baht? Go for e-payment," says Thailand's junta, offering a lucky draw as an incentive to use a new online payment scheme for business, in an effort to bring some of the massive informal economy onto the books and boost tax revenues.

As Southeast Asian economies struggle and tax income misses budget targets, Thailand's finance minister is hopeful a nationwide e-payment scheme will add tax revenue of 100 billion baht ($2.9 billion) a year to the coffers.

Finance Minister Apisak Tantivorawong has estimated the move will save banks and businesses a combined 75 billion baht a year though other policymakers expect it could take some time for businesses to change their habits. Cash and cheques now make up 80 percent of transactions.

A coup in May 2014 ended months of political unrest, but the generals have struggled to revive Southeast Asia's second-largest economy as exports and consumption remain weak.

To promote the scheme, the junta will next year offer consumers and merchants a monthly lucky draw of cash awards worth 7 million baht ($200,400) for a year. Transactions made through the system will qualify for a chance to win.

Some 5.5 million baht will be for e-payment customers, with the biggest prize of one million baht and the rest for business operators that install electronic data capture (EDC) machines.

"This should make people go for e-payment quickly," Apisak said, adding the junta aimed to bring big and small businesses into the e-payment system.

Under the system, transaction information is sent to the revenue department, so the government "can see all trade flows, making tax avoidance more difficult," said Krisada Chinavicharana, head of the ministry's fiscal policy office.

Tax evasion in Thailand is a major problem for the government. Former Finance Minister Sommai Phasee estimated evasion may have cost Thailand 30 percent of VAT revenue.

In the fiscal year ended in September 2015, tax revenue was about 2.3 trillion baht, down 9 percent from the budget target, with VAT at 709 billion baht. Thai tax revenue is equivalent to about 17 percent of GDP.

The junta is also urging small- and medium-sized enterprises (SMEs) to register a single accounting book by giving them tax incentives and no tax retroactive checks, which will help expand the tax base and prevent firms from avoiding taxes by keeping two books - one for tax authorities and the other for banks.

From 2019, banks will have to use the same accounts companies' submit to the tax authorities as the basis for lending decisions.

"We think this policy is a good step, and it will tend to decrease the informal sector," said Kiatipong Ariyapruchya, senior country economist of the World Bank for Thailand, adding Thailand's informal economy accounted for half of GDP between 1999-2007.

Thailand has about 2.7 million SMEs - some 700,000 are registered and only about 450,000 pay taxes, according to the Office of Small and Medium Enterprise Promotion.

Under the master plan, a new money-transfer system, PromptPay, will enable people to transfer money and make e-payments using a mobile phone or national identification card linked to a bank account from October.

The scheme will later be widened to include complete electronic tax services and all government payments.

Electronic payments will be more convenient but some expressed concern about privacy.

"It will be good in a sense that it will prevent employees from taking money from the cash register, but it won't be good because the tax man will know everything," said Panisa Boonchaiwattana, a coffee shop manager in Bangkok, who said she would use an EDC machine.

"The idea of the government monitoring your bank account is kind of intimidating," said Raweeras Poochareon, owner of tie-dye textiles shop in Chiang Mai. "I feel like I lose my privacy. I refuse. I wouldn't win the lotto anyway."

Bank of Thailand Governor Veerathai Santiprabhob expects it may take some time before the scheme gains general acceptance as it requires a change in behavior.

"I think Thai people are quite receptive to new technology. For smaller businesses, there will be a challenge," he said.

"But it will take time, it won't be that one day we have this proper system, push the button and people will switch."

(Additioanl reporting by Kitiphong Thaichareon; Editing by Simon Webb and Jacqueline Wong)