Land tax would only hit a few: Korn

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Land tax would only hit a few: Korn 
Bangkok Post: 1 Oct 2010
Korn: Land tax would hit only a few
90% of properties might be exempted

An exemption level for the new land and building tax at 1 million baht would essentially waive tax liability for 90% of all properties in the country, says Finance Minister Korn Chatikavanij.

The Council of State is currently vetting the proposed tax law, which the government hopes to introduce to Parliament in the current session before the end of the year.

The actual exemption level would be decided after the law is passed, but Mr Korn has indicated in the past that the law would not be aimed at penalising less wealthy landowners.

Mr Korn, speaking at a public hearing on the new tax law, said that in principle, exemptions would also be given for housing units and property used as a personal residence and land used for personal farming.

The proposed law features a three-step tax rate, with commercial and industrial properties subject to an annual tax of up to 0.5% of the value of land, buildings and properties, residential property 0.1% and agricultural property 0.05%. Tax rates would be set by a separate committee up to the maximum rate allowed under the law.

The law also allows for tax rates to increase to penalise landholders who do not develop their properties.

Ittiphon Srisaovalak, a researcher for the Centre for Land Policy Studies, said that of the 320.7 million rai nationwide with land rights documents, between 11% and 18% is estimated to utilise less than half its actual potential.

Opportunity losses for the economy due to underdeveloped land were estimated at 127 billion baht per year in a study done in 2000.

Sakon Varanyuwatana, an economist with Thammasat University, offered the opinion that any exemptions in the tax must be clear and transparent.

"What happens if one uses their home as an office? If the rules are not clear, it could lead to problems in implementation," he said.

Dr Sakon said that exempting personal residences from the law also needed to be carefully structured to avoid placing undue hardship on poor citizens with large homesteads, particularly in rural areas.

Duangmanee Laovakul, another academic with Thammasat University, said she hoped the tax would help facilitate greater land ownership across the population, as well as encourage more efficient use of land.

In large provinces, such as Bangkok and Phuket, land is controlled by a few people, with 10% of all land held by the top 50 landowners.

In Bangkok, private landholdings cover 900,000 rai by 140,000 owners, with the top landowner controlling 14,700 rai alone.

http://www.bangkokpost.com/business/economics/199098/korn-land-tax-would-hit-only-a-few