ASEAN KEY DESTINATIONS
Tax plan for poor homebuyers
The cabinet yesterday approved changes to its first-time homebuyers tax incentive plan, which will increase the estimated loss to state coffers by 10 billion baht (US$322.7 million).
Faced with a barrage of criticism that its plan to give tax deductions on homes worth up to 5 million baht would not benefit low-income earners as promised, Prime Minister Yingluck Shinawatra said the cabinet yesterday decided to change the criteria of the scheme from "tax deduction" to "tax exemption".
But that in turn raised the projected tax receipt losses from the scheme to 12 billion baht, compared with 1.7 billion baht under the first plan, said Anuttama Amornwiwat, deputy government spokeswoman.
"The change will offer a real benefit to first-time home buyers and this policy does not favour any particular group or property developers," Ms Yingluck said.
The original plan called for allowing homebuyers to take a tax deduction equal to 10% of the value of the home, which would have been used to reduce a person's taxable income. Homeowners would have been able to spread the deduction from their taxable income over a five-year period.
After the deduction, the remaining taxable income would have been subject to taxes based on applicable tax rates.
Under the new plan, the income taxes a homebuyer pays would be reduced in an amount equal to 10 percent of the home value, spread over a five year period.
The cabinet acknowledged that the Council of State needed to research the proposal to ensure it does not conflict with existing income tax laws. It thus approved implementation of the project pending a positive ruling by the council.
The government would issue a Royal Decree to support the scheme which would retroactively come into effect on Sept 27 if the Council of State gives the green light, she said.
Deputy Finance Minister Wirun Techapaiboon said additional mechanisms are being considered for inclusion in the first-home policy. He proposed offering new buyers zero interest rate loans for 3 years for homes that cost no more than 2 million baht.
The Government Housing Bank would subsidize 25 percent of the scheme, and the government, the rest.
The additional scheme will be put before the cabinet next week.
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