The Finance Minister of Thailand has determined that the country’s property tax bill is out of date and needs to be rewritten. Kittiratt Na-Ranong argues the new bill should not apply to all lands, but only those lands that have been appraised by the Treasury Department, because so little land has actually been appraised. He has also suggested that the tax ceiling should be flexible based on the type of land and its use, and analysts note the proposed rates are low when compared to others in the region. Na-Ranong also wants to scrap the idea of a Land Bank and provide tax exemptions to farmers and residential landowners. For more on this continue reading the following article from Property Wire.
The long delayed land and property tax bill for Thailand is to be redrafted to take into effect changes since the last general election.
It is also proposed that the ceiling on tax rates that are based on appraisal prices will be increased to make the bill flexible. The rates proposed by the previous government were 0.05% on farmland, 0.1% on residential plots and 0.5% for commercial land. Unused land would be subject to a 0.5% rate, with the rate doubling every three years. The ceiling rates are quite low compared with rates imposed by other countries, according to Somchai Sujjapongse, director general of the Fiscal Policy Office. ‘It does not mean that local governments will adopt maximum rates, but the effective rates would be much lower,’ he explained.
Another change urged by Kittiratt relates to tax allowances. The current draft offers tax breaks for both small and low value land plots but the new draft would offer tax breaks based solely on value. The tax exemption would be given to farmers and residential land owners. Kittiratt also wants a proposal to create a Land Bank scrapped. The reason is that the central government should not take local governments’ revenue, said Sujjapongse. The previous government proposed setting up the Land Bank, which would buy land from people and then redistribute it to landless people, with the funding coming from property taxes. Relevant parties in the real estate industry now have a chance to put forward their views under a consultation process and a public hearing is likely to be held before the proposals are forwarded to Kittiratt.
Tax officials and economists have pushed for the changes for many decades without success. Political support for the bill has been weak, as most politicians are large land owners. The previous government’s finance minister, Korn Chatikavanij, got the Cabinet to approve the bill, arguing that Thailand should tax wealth to create a more just system. The current tax system is said to be unfair to wage earners, as their wages are taxed, while the financial assets, land and other wealth of the rich are hardly taxed. The land and property tax would be collected by local governments and is expected to help them get more revenue for community development.
This article was republished with permission from Property Wire.