Land tax feeler wins few friends

[sandman67]

Korn's call to revive bill could be bad for govt
By: POST REPORTERS
Published: 24/01/2009 at 12:00 AM
Newspaper section: News

Finance Minister Korn Chatikavanij's proposal to dust off a much-delayed land and building tax bill could become a prickly issue for the government which could shorten its political lifespan.

In what could be an attempt to test the waters, Mr Korn on Thursday said the Finance Ministry should give the bill serious consideration.

He said he would also give the land and building tax bill, drafted and proposed by the Fiscal Policy Office (FPO), a push if he found it appropriate.

"There is a challenge from the FPO. It says there is one tax bill which always brings down a government when it is proposed. It is the land and building bill.

"If I find it appropriate, I will give it a try. A House meeting was brought to an end when the bill was picked for consideration. But I think it is time for the country to consider this bill," said the finance minister.

The draft law, which was first proposed over a decade ago to upgrade the country's tax system, has always been met with strong opposition from the public and politicians.

The bill, which requires people to pay taxes on houses and land they own, would increase the financial burden on middle and low-income earners.

Another proposed law which has long been shelved is an inheritance tax bill which is now being studied by the FPO.

The proposed land and tax bill yesterday received a warm welcome from an adviser to Agriculture Minister Somsak Prisanananthakul who believed it would stimulate development of unused land.

He said many land plots remained under-developed because their owners simply bought them for price speculation.

Mr Somsak, however, suggested that different tax rates should be applied to avoid the impact on the poor. Minimal rates should be imposed on agricultural land while unused plots in an irrigation area should be taxed at progressive rates.

"If the law is promulgated the country will receive great benefits. Those who have huge plots but do not make use of them will [be forced by taxes to] give up their land for use," he said.

Land which is not used or developed is a "wasted asset".

Some politicians may oppose land and building taxes to protect their own interest. They are big-time land-holders.

Opposition chief whip Wittaya Buranasiri said the government was proposing the tax to pull in more revenue, to compensate for the 115-billion-baht supplementary spending budget.

He warned the government not to proceed with property taxes especially during the economic slowdown.

Bancha Pandee, an Ayutthaya farmer, disagreed with the proposed land and inheritance taxes. He said the government should not assume landowners are rich.

He said the value of land owned by farmers may exist only on paper and in some cases they are estimated at a higher rate than real market prices.

Mr Bancha said he now owns 100 rai of land and if the tax measures are in place, he will have to pay huge sums of tax when the ownership of land is given over to his children. Farmers without cash in hand would have to take out loans to pay the tax.

Theerakit Wangmuthitakul, president of Surat Thani chamber of commerce, said the tax proposal was ill-timed considering the state of the economy.

However, Bangkok Senator Rosana Tositrakul welcomed the tax proposal. She said fair distribution of wealth through tax measures should help narrow the gap between the rich and poor.

Thanant Tanpaiboon, head of a property business club in Phuket, agreed with the proposal.

Paiboon Upatatisaring, chief of the Phuket provincial administration organisation, said the tax was a good idea to share wealth.

Comment: This could make the situation round here interesting eh? still...no hope of this passing muster is there

[Super Joe]

The proposed draft reported on last year said the tax rate ceiling was 0.1%, therefore it will only affect poor Thais rather than wealthy land speculators.
Might encourage poorer Thais holding large chunks of family land to sell, maybe at cheaper rates, maybe enabling houses to be built and priced cheaper, maybe pigs will fly. Been looking around at land and Thais still will not drop one Baht and prices are still rising.

I think it's wrong a government forcing people, by financial penalties, to do something with their own land!?!?

SJ

[sandman67]

I dont see a problem taxing landowners for the fact they own large blocks of unused "residential use" land.....or blocks of farmland they use to screw money out of poor tenant farmers.

correctly implemented this would serve to tax rich landowners who have large blocks of unused land they hold for speculative or farm letting purposes, pop the property balloon, and thus stimulate the economy...

as well as raise much needed tax revenue.

ah...yes...I spotted the fault there....

correctly implemented.....

If implemented it would no doubt miss the intended, hammer the poorer section of Thailand, and the taxes would be pissed up the wall buying more guns and soldiers for the sooooo essential massive military machine (that couldnt defend itself against any half baked invasion anyway...I mean really guys...they got spanked by a smaller force of Cambodians recently).

it is a Buddy Holly proposal tho

[STEVE G]

It sounds nasty to me; my partners family between them own quite a bit of land up in Issan, but because of the amount of water available it doesn’t really generate much income and nobody would want to do anything else with it, so they wouldn’t be very happy about being taxed on it.
It could be just a method to force poor land owners to sell their land.

[Super Joe]

I dont see a problem taxing landowners for the fact they own large blocks of unused "residential use" land.....or blocks of farmland they use to screw money out of poor tenant farmers

Not sure it applies to the latter SM, if they are renting to farmers they pay 12.5% tax on the rental received from the farmer tenants (yeah bet they do like), hence it's not 'unused' land. Don't fully understand it so may be wrong there.

It sounds nasty to me; my partners family between them own quite a bit of land up in Issan, but because of the amount of water available it doesn’t really generate much income and nobody would want to do anything else with it, so they wouldn’t be very happy about being taxed on it.

May not be too much of an issue Steve, the maximum tax rate is 0.1% and is based on local governments value of land.
So example: my wife's family have 20 Rai in Bulilililam, value 50k a Rai = 1,000 Baht tax IF max. rate.

However, Hua Hin say family have 20 Rai @ 3M Rai = 60,000 Baht tax

SJ

[sandman67]

this proposal seems to be gathering steam - now Abba has swung behind it

Govt backs property, assets tax

LAND, INHERITANCE LEVY 'MUST DO' POLICY
By: POST REPORTERS
Published: 25/01/2009 at 12:00 AM
Newspaper section: News

Prime Minister Abhisit Vejjajiva has pledged to introduce property and inheritance taxes, even if they cost the government popularity.

He would lobby government coalition partners to support the draft legislation when they meet today.

Mr Abhisit said the government would go ahead with the proposals as they were part of the country's tax reforms. The government was working to improve the public welfare system, and property and inheritance taxes would expand its revenue collection base.

On Friday, Finance Minister Korn Chatikavanij said the government wanted to take a new look at a land and building tax bill before the Fiscal Policy Office (FPO), first proposed over a decade ago to upgrade the country's tax system.

It has always been met by strong opposition from the public and politicians.

Mr Abhisit said the government also wants to introduce an inheritance tax, another long-shelved measure also before the FPO.

Mr Abhisit said the proposed property tax would combine land and building law and local development tax law to generate "handsome" revenues for local organisations.

Under current law, no tax is applied on earnings from non-leasehold land and property, while land and buildings which are offered for lease are taxed at 12.5% of revenues earned.

Mr Abhisit said the government would consider how to make tax collection fair to landholders. He added that tax waivers should be considered for low-income earners in need of accommodation, while progressive rates should be levelled against people who amass land plots but fail to put them to use.

The property tax would address unfair distribution of land, and it was the government's job to explain why it was a "must do" policy.

"Some people have numerous plots of land which are left unused while we are struggling to solve land problems for poor people. This is not fair."

Commenting on possible opposition from politicians who are big landowners, he said the tax scheme would only show the government was raising taxes for the common good.

Appointed senator MR Priyanandana Rangsit said the tax rises would burden land developers, which would eventually affect consumers.

However, Suriyasai Katasila, coordinator of the People's Alliance for Democracy (PAD), welcomed the tax proposals, saying property and inheritance taxes would lead to fairer distribution of land and help bridge the income gap between rich and poor.

Mr Abhisit said the proposed property tax would combine land and building law and local development tax law to generate "handsome" revenues for local organisations.

ahhhhh....so lets guess what the "local organisation" here will spend the revenue on....more neon signs

[hhfarang]

ahhhhh....so lets guess what the "local organisation" here will spend the revenue on....more neon signs

Well, from the past 4 years experience here, I doubt it will be on the things that Hua Hin needs, like infrastructure upgrades, i.e., traffic lights at Phetkasem and any soi that crosses the RR (102, 94, 88, 56...), or repaving crumbling sois, or putting safety gates at unguarded railroad crossings, etc., etc., etc.!