Thailand’s Finance ministry has proposed new rates for land and building taxes which will widen the ceiling tax waiver amount for residences to 1.5 million baht from earlier proposed 1 million baht in what was seen as a fresh attempt to ease public concern.
Based on the effective tax rates, an estimated 200 billion baht will be collected, up from 25 billion collected under the current local development tax and house and land tax, Finance Minister Sommai Phasee said after meeting with the Committee on Monetary, Finance, Banking and Financial Institutions.
But apparently this new move did not succeeded in its attempt to quell criticism : despite the new softened version of the much criticized law, it still raises concerns that home and land owners in areas where land prices are high would be forced to sell their assets to investors when they cannot absorb the tax burden.
The Democrat and Pheu Thai parties joined the public outcry over a bill on a land and buildings tax on Tuesday, while Prime Minister Prayut Chan-o-cha urged the public not to overreact because nothing has been finalised.
The bill, which is expected to be tabled for cabinet consideration in two weeks, has come under heavy criticism, as people feel too much of a tax burden will be placed on most home and landowners.
New rates were in the draft bill proposed by Mr Somchai Ruechuphan, the committee chairman, at a meeting with Mr Sommai yesterday.Under the draft bill, lower than the present tax rates will be allowed for certain types of properties such as agricultural farm land where only 0.05% of taxes will be collected as opposed to the stated 0.25%.
As for properties used as private residences 0.1% tax will be charged, while commercial properties at 0.5%.
On his Facebook page, former finance minister Kittiratt Na-Ranong, of the Pheu Thai Party, said the land and building tax proposal reflects the Prayut administration’s lack of understanding of tax collection and economic administration.
Vacant or unutilized land will be subjected to 0.5% tax and finally, to ensure minimum effects on lower income households, the meeting also agreed to tax exemptions for homes appraised value at 1.5 million baht.The proposed exemption will also take into account properties owned by temples, foundations, the Royal Household and private properties that have been utilized for public use such as in the case where roads have been constructed over parts of private property for public utility.
Meanwhile, Prime Minister Prayut said the public should not worry about the government’s tax collection proposals, saying none of them are settled and the National Legislative Assembly still has to scrutinise them. “It is not happening today or tomorrow,” he said.
Proposals for reduction in taxes were also agreed upon for private residences appraised values between 1 – 5 million baht whereby only 0.05% taxes will be collected. This will mean that for houses with appraised value between 4 – 5 million baht only 2,000 – 2,500 baht in taxes will be collected per year. Previously, taxes for such homes were 4,000 baht per year.With regard to vacant or unutilized lands initially, 0.5% will be charged but taxes will be doubled for every consecutive 3 years. But the incremental increase will be capped at 2% as set by the law.