ASEAN KEY DESTINATIONS
Fate of Thai real estate tax unknown
The Council of State has approved the cabinet's version of the long-overdue bill. It levies taxes in a range from 0.05 percent to 2 percent of the appraisal prices of land and property.
Farmland on which at least 75 percent is planted with crops would be taxed at between 0.05 percent and 0.1 percent, and commercial land at 0.5 percent. Vacant plots would be taxed at 0.5 percent and the rate would double every three years to a maximum of 2 percent, which is intended to promote utilization of the land.
Residential and farm land of no more than 50 square wah and 1 million baht in appraised value would be exempt, based on Finance Ministry consideration. The taxes will be collected by committees set up by local administrative bodies.
"The country's attempt to have a land and property tax has made progress. It is a clear version that is ready to submit to Parliament right away," said Eathipol Srisawaluck, a law lecturer at Chulalongkorn University. "But it all depends next on whether the government is really determined and if parliament is sincere in deliberating it."
His concerns reflect the delays in enacting reform bills for the past two decades. The bill has a primary goal to advance the process of fiscal decentralisation as it helps local communities to collect and manage tax funds.
Asst. Prof Eathipol said resistance was coming not only from landlords, but also from other property owners who do not recognise the benefit of the tax.
"The tax rate in the latest bill is not high, but not too low either. It would not have any significant impact on landowners," he said.
The government expects the tax to reduce the concentration of holdings in the hands of large landlords, but Mr. Eathipol says the tax rate is still too low to force such a change.
To create real change, he said, a progressive tax system based on the amount of land ownership, as proposed by the government-appointed National Reform Committee, should be implemented.
The land and property tax will be the country's first asset-based tax, as all taxes are based on income. The country has no inheritance tax.
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