Land Reforms.

[thaiorchid]

I read in The Nation about a week ago, that there in Thailand are more than 1000 landowners with between 400.000 to 500.000 rai EACH. At the same time there is about 1 million landless farmers. If you play around a little with the numbers, taking the land from the extremely rich and distributing it to the very poor, the latter would end up with 400-500 rai each. Enough for some sustainable farming.
I am very well aware, that it will never happen in Thailand, Thais are even more afraid than the Americans of anything that looks like social justice = Communism.
So we are not going to change anything, but it would be interesting to know, what the readers think about it. Big staterun farms ? Agricultural cooperatives ? Biofuel plantations ?
And how are "we" going to get the land from the extremely rich ? Confiscate it? Pay peanuts? Pay marketprice?
Politically I am quite neutral, I just like to play with ideas.
I am going to promote (?) you to the Minister of Landreforms, and are looking forward to your suggestions.
Please do not make this to a thread about farang landownership.
thaiorchid

[Wanderlust]

thaiorchid,
I think I would want to know first how the 1000 land owners came to have the land they own - passed down through the family, bought, stolen, whatever? This would have a big bearing on how I would deal with it. Equally, just giving land to somebody because they don't have any would not necessarily work; how do you know that they wouldn't just sell it?

There would have to be a number of conditions applied to both who gets it and what they can do with it. In many ways it might be better for the government to take ownership (nationalise it I guess?) and then rent it to the poor farmers at nominal rates, with an option for them to buy it if they farm it well enough (not with borrowed money). This would encourage them to work the land and also save money. Hand in hand with this ought to be some assistance with agricultural necessities, and some educational programmes to help them farm it sustainably and profitably. They wouldn't be allowed to sublet it either but could operate some sort of crop share system where the workers would live and work on their own plot for a guaranteed price for each kilo. This is all off the top of my head of course and I'm sure there are things that could go terribly wrong with the idea!

[JD]

Wait until the land tax kicks in in January next year. All taxes are based on the Land Office valuation of the land, not it's sale value.

Taxes as appropriate are as follows. 2% tax for land that is used for housing, business or agriculture. 10% tax for land that is not used, lying dormant or overgrown jungle.

Expect a lot of land to come on the market all at once come tax payment time.

[thaiorchid]

Wanderlust
How the 1000 landowners got to have their land, I do not know, but probably a combination of the 3 posibilities you mention, inherited, stolen and bought. And you are right ofcourse the reciepiants would sell the land probably within a week. And the big winner is Thai Bev.
Knowing the country and its people so well, as you do, I think your suggestions makes a lot of sense.

JD
I do not know where you have got your numbers from, but they are very wrong.

Property Tax Rates. Source:Finance Ministry.
Tax rates to be proposed for Cabinet approval this month and possibly to the House for approval in August:
Type Max rate(% of taxbas
1. Land and buildings except (2) and (3) 0.05
2. Land and buildings for residential purpose 0.01
3. Agriculture 0.05

And the valuation is not going to be by the Land Office, but by the Treasury Departments valuation committee.
But you are right about, it will no doubt bring some idle land to better use.
thaiorchid

[Super Joe]

JD, I do not know where you have got your numbers from, but they are very wrong.
Property Tax Rates. Source:Finance Ministry.
Tax rates to be proposed for Cabinet approval this month and possibly to the House for approval in August:
Type Max rate(% of taxbas
1. Land and buildings except (2) and (3) 0.05
2. Land and buildings for residential purpose 0.01
3. Agriculture 0.05

thaiorchid

Hi thaiorchid, interesting thread.
Think you may have got your rates wrong for items 1 & 2, from what I've seen they are proposed as being:
1) Land and buildings except (2) and (3) 0.5% (*see key point below about increasing tax rates for vacant or unutilzed land*)
2) Land and buildings for residence purposes 0.1%.
3) Land for agricultural purposes 0.05%.

*Increasing tax rates for vacant or unutilzed land* - For the first 3 years this will be charged at 0.5%, after that first 3 year period if the land is still not utilized the tax rate double to 1%, and again after the next 3 year period double again to a maximum capped rate of 2%. So it will take 9 (or 11?) years for these landowners to be liable for the maximum rate of 2%.

The New Tax Implementation and Suggested Purpose:
Expected to be implemented over a 2 year period, once/if the law wins approval from Parliament. During the transition period, Ministry of Finance to charge 50% of the above rates for the 1st year, 75% for the 2nd year.
The Ministry of Finance says the purpose of this new property tax is to try and achieve what you rightly address in your OP, the disproportionate allocation of land and the mass of unused land that could be put to agricultural use and stimulate the economy. They also estimate it will bring in 60-70 Billion Baht in additional revenue.

Will it achieve it's objectives - To force landowners to sell or lease for agricultural use ?
I don't think so unfortunately, not for the wealthy land owners, why ?
- Many will be instantly better of tax-wise as it replaces the 'House and Land Tax' of 12.5%, where many of these wealthy people will have their real investments.
- 9 (or 11) years to reach the maximum tax rate for of just 2%.
- Example: Owner has 50 Rai in rural area, at 100k Baht per Rai (being generous), annual tax bill in 9 years time = 100k Baht only.
- Finance Minister Korn, a prominent banker and wealthiest minister in the cabinet, said his own tax liability would increase by 800,000 Baht, peanuts to him!?
- The loophole already talked about, landowner 'leases' land to family members who plant a few pineapples, only pay the 0.05% rate.

How the new tax may affect us (a bit off-topic but worth noting)
It replaces 2 no. existing taxes, 1) 'House and Land Tax' 12.5%, applicable to commercial use and 2) 'Land Development Tax' local tax for landowners, even residential, though rarely collected. It will be a big benefit to those liable to the 'House and Land Tax', ie:
- Those holding property through Limited Company.
- Those who rent out their property.
- Those with second homes, rented out or not.
- Those lessors who lease out their land.
Individuals with a single residential property will now have to pay the new tax of 0.1%, peanuts. And if they own the land then no longer liable for 'Land Development Tax' which is greater than the new 0.1% anyway.

Back to your OP:
There would need to be a far higher tax rate imposed on holders of mass unused land to make it work IMO. If these wealthy, often Bangkok based business people, are not presently bothered about getting extra income by leasing out their land because presumably it's nothing to them, why would they be bothered by a 100-200k additional tax bill !?!?

SJ

[Roel]

A quite common way land goes from the poor to the rich not mentioned here is lost collateral after failing to repay loans.
So for this reason the Robin Hood approach might not work from the start.

[Spitfire]

Good point Roel, large swathes of Thailand actually belong to the banks, imparticularly the local farmers banks, where local countryside dwellers have put the deeds in their keeping in return for a loan that there is little chance of it ever being paid off. On top of that, then I would say the Krung Thai bank is also full of properties at discount prices, those boards outside the banks are always full of 'For Sale' houses.

It is however a strange situation in the countryside as, even though many people do not hold the deeds to their land and have little chance of repaying the loans, the local town banks seem very reluctant to reposess or take control of the land, let alone sell it against the farmers will.

I think this is why so much ends up in the banks because people believe that they can have a large loan, often hundreds of thousands of baht but still get their land farm with almost no chance of being forced off it. The usual MO is that they have to go to the local bank and "report" once a year and either pay it off or get a lecture and lose some face but that's about it. The way this works is very different to how it does in the urban situation with the high street banks.

What I can see happening is that when the current generation of Thai farmers that are on the land now pass away, then there will start to be larger and larger farms as it's hard to see where the next generation of farmers is coming from, OK, there will always be some but I doubt it will be on the scale that we see now and have seen in the past, I don't meet that many young Thais that want to farm the land and I work at a college/university but they are mostly sons and daughters of farmers.

I can see banks aquiring massive areas of land in about 20 years as they keep the deeds of the land when farmers pass on and no-one settles the outstanding debt, it will happen though design or default, just a matter of time.

Nothing is for sure I guess but it's a possible senario which is not a too bigger stretch of the imagination.

[Big Boy]

Sorry Guys, I just had to re-name the title of this thread - I kept reading it as Laundry Forms. Thanks for your understanding.

[Spitfire]

Funny BB, there's me opening up this thread thinking you've 'laid it down' about land after a chat with your Mrs.