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Property Tax ‘Likely to be Fairer’

By on Jul 13, 2015 in Property News
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Finance Minister Sommai Phasee and staff have relaunched their campaign to impose land and property taxes. This time, they promise a higher (progressive) tax on wealthy land owners, but still want to tax everyone who owns land and property.

The Finance Ministry is set to impose a progressive tax on land and buildings instead of the flat tax system proposed earlier, saying this would be a better way to narrow economic disparity, a ministry source says.

A bill on the controversial land and buildings tax, which is being amended, will stipulate progressive rates that will mean bigger tax bills for people with expensive properties.

The concept is the same as for personal income tax, which takes a larger percentage of tax from high earners than it does from low-income individuals. However, the new property tax will not offer any tax allowances.

The change has been mulled after strong criticism from the public that the earlier proposed system would be unfair because everyone would be subject to the same tax rate regardless of asset value.

Concerns over the high financial burden prompted Prime Minister Prayut Chan-o-cha to halt the bill and ask the Finance Ministry to seek ways to alleviate the burden of low earners.

Bangkok IndustryThe land and buildings tax aims to narrow social inequality and boost the government’s revenue stream at a time when it needs to finance infrastructure investments.

The tax is expected to be enforced in 2017 after the Treasury Department has completed appraisals of 30 million land plots. It has completed assessments of only 7-8 million plots so far.

The new tax will replace the local development tax and house and land tax, which have been criticised as regressive because they are based on outdated appraisal prices and have many waivers.

According to the previous proposal, homeowners would be charged 0.1% of the appraised value of their homes. Land for agricultural and commercial use would be taxed at 0.05% and 0.2% respectively under that system.

Houses with an appraised value of up to 2 million baht would receive a 75% tax allowance, translating into a 250-baht tax payment for every 1 million in value. Residences with an appraised value of 2-4 million baht would receive a 50% tax allowance, with owners liable to pay 500 baht for every 1 million in value from 2-4 million. For houses appraised at more than 4 million baht, owners must pay the full tax of 1,000 baht for every 1 million in value for amounts exceeding 4 million.

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Source: Bangkok Post – 13 July 2015

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