It is aimed at helping property owners make better use of their property and land especially in terms of selling any that is unused.
Officials denied that it would amount to some kind of land grab where unused property would be leased to farmers for agriculture as part of the government's drive to raise more crops for food and alternative energy to combat global warming.
The Land and Construction Tax Bill is set to be discussed by the government in August and will then go to parliament for approval later in the year.
It could be bad news for some residential property owners because they will no longer enjoy their tax exemption under the current house and land tax law that has been in force for more than 80 years.
Most believe it will mean an increase in property tax as currently property tax revenue constitutes less than 10% of the total budget and officials see this as an easy way of boosting the government's coffers.
Although overall property owners will enjoy a lower tax rate if they fail to use their land they will face a huge increase in tax. It is also not clear how the new tax regime will affect apartments.
Other questions are being raised over how land and property will be valued under the new tax regime especially where the utilisation is mixed, such as partly residential and partly commercial or agricultural.
Property professionals say there must be an assurance that the local tax authorities would not assume that the entire property is in commercial use. If this remains unclear, owners will attempt to split property into pieces to avoid the tax.
The law should have a clear definition of the term 'construction'. The current law is interpreted by the Tax Court to apply even to telephone booths.
'We know that the valuation process is complicated. The government has recently assigned the Treasury Department to do the re-valuation of all properties throughout the country,' said an official.
