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Land-tax bill to reach Parliament ‘soon’

By on Jun 09, 2012 in Property News

Kittiratt wants changes to long-awaited draft first

The long-delayed land and property tax bill may be forwarded to Parliament for debate soon, now that Finance Minister Kittiratt Na-Ranong has expressed his support for it, Somchai Sujjapongse, director-general of the Fiscal Policy Office, said yesterday.

While Kittiratt backs the bill, which was drafted by the previous Democrat-led government, he has asked officials to make some changes.

Instead of being imposed nationwide, Kittiratt suggested the legislation should apply only to land plots that have been appraised by the Treasury Department, Somchai said. Kittiratt’s idea is quite practical, since the Treasury Department has so far been able to evaluate land prices for about 6 million of 30 million land plots nationwide, according to Somchai.

He said he had proposed to Kittiratt that the ceiling on tax rates that are based on appraisal prices be raised to make the bill flexible. The rates proposed by the previous government were 0.05 per cent on farmland, 0.1 per cent on land used for residential purposes, and 0.5 per cent on land for commercial use. Unused land would be subject to a 0.5-per-cent rate, with the rate doubling every three years.

The ceiling rates are quite low compared with rates imposed by other countries, said Somchai. “It does not mean that local governments will adopt maximum rates, but the effective rates would be much lower.”

Another change urged by Kittiratt relates to tax allowances, he said. 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,” Somchai said.

For example, if a land plot is worth less than a certain amount – say, Bt500,000 or Bt 1 million – it would not be subject to property tax. (These figures are purely hypothetical.) The tax exemption would be given to farmers and residential landowners.

Kittiratt also wants a proposal to create a Land Bank scrapped, Somchai said.

“The reason is that the central government should not take local governments’ revenue,” he said.

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.

Somchai said he had consulted with relevant parties, who would send back their proposals within a month. A public hearing will be held before the proposals are forwarded to Kittiratt, he said.

The property tax bill is long overdue. Tax officials and economists have pushed for it for many decades without success. Political support for the bill has been weak, as most politicians are large landholders.

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.

The government is under pressure to boost tax revenue, as it plans to cut the corporate tax rate further to 20 per cent next year after cutting it from 30 per cent to 23 per cent this year.

Source : The Nation 9 June 2012

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