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Should property ownership be restricted in Thailand?

The Bangkok Post : A proposal from the National Reform Committee to restrict property ownership to 50 rai a family has run into opposition from a deputy interior minister. The property reform is one of five recommendations the committee, chaired by former prime minister Anand Panyarachun, plans to put forward today as part of the government’s national reform plan to rid Thailand of social inequality.

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The Bangkok Post:

A proposal from the National Reform Committee to restrict property ownership to 50 rai a family has run into opposition from a deputy interior minister.

The property reform is one of five recommendations the committee, chaired by former prime minister Anand Panyarachun, plans to put forward today as part of the government’s national reform plan to rid Thailand of social inequality.

Mr Thaworn also said rich people who own lots of land that is left to sit idle should be taxed at a higher rate.

”[But] I disagree with a proposal to cap a family’s landholding at 50 rai,” Mr Thaworn said.

”There remains a lot of unused land that could be allocated to poor people for use to make a living.”

He said he supported a proposal calling for the disclosure of information on land ownership nationwide.

A member of the National Reform Committee, Permsak Makarapirom, said…wealthy businessmen had tried to get around the law by using villagers as nominees to hold land on their behalf and then used these farmers as workers on the land. He said justice could be achieved through the promotion of land ownership for poor people.

BP: Can understand the rationale behind such a proposal, but surely increased taxes is a better option and particularly a property tax which has recently stalled. The Bangkok Post last month:

The land and building tax bill will be postponed further to the next government, as the finance minister admits his target to start tax collection on land by June cannot be achieved.

The bill is designed to reduce social inequality among Thais as 10% of the population own more than 100 rai of land each while 90% own less than one rai.

Somchai Jitsuchon, research director of macroeconomic development and income distribution for the Thailand Development and Research Institute, said a land tax could increase state revenue by 100 billion baht a year, enough to provide social welfare for low-income earners for life.

For an explanation on how this would apply, see the Bangkok Post again:

For instance, the law will exempt property worth less than 1 million baht, a level that would essentially make the tax inapplicable for some 90% of all landholdings nationwide. …

In reality, the actual tax levels themselves are not particularly onerous, with commercial properties subject to a maximum rate of 0.5%, followed by residential properties at 0.1% and agricultural land at a paltry 0.05%. Undeveloped land would be subject to a tax rate of 0.5% and doubled every 3 years up to a maximum annual tax of 2% to encourage more efficient use and economic development of land.

So a homeowner with a house valued at 1 million baht would essentially be subject to an annual tax of just 1,000 baht based on the maximum rate, and more than likely would pay even less if the effective rate set by community authorities was lower.

BP: Why not impose this tax (and use the money to provide better education, health, and other policies) instead of trying to limit the quantity of land that can be owned by a simply family?

On why the property law has failed, in the words of a Bangkok Post reporter “the Democrat Party doesn’t want to expend political capital on a parliamentary fight…..[b]ut the Democrats undoubtedly know that it’s a risk to introduce any new tax and risk voter wrath so close to election time, no matter how worthy or narrowly crafted the impact” (see the last article quoted above).

btw, will this proposal apply to all families and what happens if an entity owns the land on behalf of the family?

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Should property ownership be restricted in Thailand?

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