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Land tax could pass by year-end

Korn: Megaprojects must move forward The new land and building tax could pass Parliament by the end of the year and become law within the next 12 months, according to Finance Minister Korn Chatikavanij. He said the new tax, which would be collected by local administrations and assessed on buildings, land and property nationwide, would help modernise the country's tax system and encourage more efficient use of property. "The property and land taxes are aimed at better economic use of land rather than enabling the government to collect more taxes," said Mr Korn at a luncheon talk with Dutch companies operating in Thailand. Mr Korn, whose great-grandfather is Dutch, also stressed that the government's 1.5-trillion-baht infrastructure investment programme would continue even if the government changed. He said a new election, possibly occurring in 2010, was the "best option" to the underlying political tensions. "The challenge for the government is execution of these projects, which include mass transit, road, rail and the health-care system; all of these sectors are important to the Thai economy," Mr Korn said. "These projects are non-controversial and could be undertaken by any government." Mr Korn added that public debt could rise to 60% of gross domestic product by 2013 after including an additional 800 billion baht in borrowing to finance the infrastructure programmes. He insisted that this remained within manageable levels, and that new infrastructure investment was critical for Thailand's medium-term competitiveness and economic growth. More effort is needed despite recent signs of "green shoots" in the local and global economies, signalling that perhaps the worst of the economic crisis has passed. The Fiscal Policy Office said yesterday the economy had likely bottomed out in the first quarter, which could see a year-on-year contraction of over 6%. Somchai Sujjapongse, the FPO director-general, said recent data showed signs of improvement, with the second quarter likely to post a 4% contraction from last year, rising to a 3% contraction in the third quarter. A return to growth is likely to come in the fourth quarter, at a modest 1% year-on-year. For the full year, the FPO projects a 3-4% contraction from 2008. Dr Somchai said improvements in the export sector thanks to rising global demand would support Thailand's economic recovery. Gains on the SET and lower-than-expected job losses also would help consumer confidence. Value-added tax collection, a proxy for consumption, rose to 35 billion baht in April, up from 30 billion in previous months. Tax receipts are in line with projections for a 280-billion-baht shortfall for the fiscal year ending in September. Dr Somchai said the proposed land and building tax would not take effect for at least two more years, to allow the public and local administrations time to prepare for implementation. Tjaco van deen Hout, the Netherlands ambassador to Thailand, expressed support for the the government's efforts to improve and open up the Thai economy. "We believe that the fundamentals of the Thai economy remain solid," he said. The Netherlands is the largest European investor in Thailand, with $2.2 billion in investment from 2006 to 2008. Dutch firms operating locally include ING, Philips, Heineken and Unilever. Purac, the world's top lactic acid producer, will invest 2 billion baht to build a plant in Thailand this year. The real estate group ECC is to invest $80 million in a mall in Chiang Mai to open in 2011, part of its $500-million in projects in the pipeline, which include two malls in Ho Chi Minh City.

 

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