Thailand’s land and property tax bill to be redrafted, officials confirm

It was originally written so long again that finance Minister Kittiratt Na-Ranong has asked for it to be brought up to date. He said that he generally supports the main thrust of the bill but thinks it should not be imposed nationwide. He has suggested that the legislation should apply only to land plots that have been appraised by the Treasury Department since it has so far been able to evaluate land prices for only about six million of 30 million land plots nationwide. 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.