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Ministry to overhaul property tax structure |
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Sunday, 23 September 2007 |
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Reducing the base for property tax calculations could
help increase public acceptance of the system, according to Somchai Sujjapongse,
a fiscal adviser to the Finance Ministry. Dr Somchai recently visited the United
States to survey how property taxes are assessed in different states.
He said that while US property taxes were relatively high, ranging from 0.75% to
3% depending on the individual state, the base for calculations varied as a
proportion of the actual asset value.
Land for lease, for instance, is assessed starting at 50% of land value,
residential buildings are assessed at 20% and industrial land at 40%.
Dr Somchai said a similar concept could be applied in Thailand, where the tax
base has varied as a proportion of the actual asset value depending on property
use.
The Fiscal Policy Office has already completed a draft law calling for a new
property tax on land and buildings based on valuations set by the Treasury
Department.
Finance Minister Chalongphob Sussangkarn, however, has refused to submit the
bill to the National Legislative Assembly, arguing that the proposed law should
instead be left for the new government to fully consider the widespread impact a
property tax would have on the public.
The Fiscal Policy Office says a new property tax would make the tax system more
equitable as well as create new revenues for local administrations to develop
public services for different communities.
The new property tax is also expected to help curb speculation within the
property market itself. Under the draft law, undeveloped land purchased and left
unused for three consecutive years would be subject to an annual tax double that
of normal rates. It would then double again every subsequent three years.
Dr Somchai added that a clause waiving property taxes for landholders 65 years
or older had been withdrawn from the final draft due to fears of potential tax
evasion. Landowners could shift their titles to proxies to evade tax liability.
The draft calls for tax rates to vary depending on location, with a minimum tax
rate set at 0.01% of the assessed value of the property. Tax rates would be set
by local administrations, giving communities a voice in setting rates and
deciding on development priorities.
The draft law would replace the existing land and building tax, where land and
buildings offered for lease are taxed at 12.5% of the lease revenues. Current
law applies no tax for land and properties not used for lease.
source: Bkk Post
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