It has been some months since we have last heard of the proposed Land and Building Tax bill that is currently being drafted by the Fiscal Policy Office. It was early in the year when the Finance Minister, Korn Chatikavanij gave the much anticipated announcement that the government is reassessing the impact of introducing this tax into Thailand which has been shelved for the best part of a decade. At the time, as expected, it was met with mixed reaction by various factions of the business and political community with the wealthier segments of society naturally voicing much louder dissention to its introduction. However, there was a majority consensus among the general public that a land tax of this nature would encourage greater distribution of wealth.
The draft nature of the bill also sparked some wide concern not just from the wealthy landowners but also from farmers. These farmers who may own a fairly substantial amount of land are concerned of the tax due to the relatively low commercial value of their assets. This appeared to have been addressed with the FPO by having such taxes measured on a fixed benchmark rate with commercial properties assessed on an annual tax of up to 0.5% of the appraised value while residential properties at the rate of 0.1% and agriculture land at the rate of 0.05%. It was also proposed that the tax rate will be based on some zoning demarcations depending on the level of development on the land itself.
Just this week, after some months under the radar, the FPO did announce that Land and Building Tax should be used as one of the two sources of funds used to help low income earners buy property. It is meant to coincide with the launch of the seniors’ savings scheme early next year which aims to target some 24 million temporary workers and low income earners. So it would seem the proposed tax does have some merit in respect to its notion of creating a fairer system, at least, in its intention. It would be some time before this tax, if passed, comes into play and it will be interesting to see how this will help solve the wealth gap of the nation.
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