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Land Near Stations Faces Tax

By on Jul 15, 2016 in Property News

Plan to fund future infrastructure projects

The government is studying the possibility of generating revenue from developed land near big-ticket infrastructure projects through a so-called betterment tax.

The tax would be levied on the increased value of land prices spurred by government investment. That revenue could then be used to finance future infrastructure projects.

Several countries have embarked on infrastructure development because they considered such projects worthwhile in terms of economic returns, said Finance Minister Apisak Tantivorawong.

He cited Taiwan as an example of a state that had pumped money into infrastructure projects while the country’s economy was in the doldrums, with those projects eventually giving a boost to the country’s GDP once they were completed.

Mr Apisak said electric trains and rail projects foster urbanisation, the government should take advantage of the developments taking place around the projects. Those developments, in turn, would also attract more passengers, raising revenue from fares in the long run.

The idea of the government developing such land or impose a so-called betterment tax — or what the Finance Ministry calls a land development tax — to generate income was floated by Prime Minister Prayut Chan-o-cha, who said he wanted infrastructure projects to not just generate revenue from fares, but add value to the country.

The land development tax centres around the principle that the state should also benefit from the inflated land prices spurred by state-backed infrastructure projects.

If the proposed land development tax goes through, it is set to target commercial property, Mr Apisak said, adding that residential owners could also be taxed if they make a large profit from selling their property. He also said such developments could entail expropriation.

Source: Bangkok Post – 15 July 2016

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