Landlords and those who do not understate their liabilities for house and land tax and local development tax will not shoulder a higher burden when the land and buildings tax comes into force, says a well-placed government source.
The new property tax will stem loopholes in the house and land tax and the local development tax, the amount of which is decided by local administrative organisation officials.
The land and buildings tax bill will depend on the Treasury Department's appraisal prices, an informed source at the Finance Ministry said.
The department's appraisal prices will be disclosed to the public, the source said.
Offering a mandate to officials of local administrative organisations has opened up opportunities for them to call for tea money from landlords in return for assessing low tax bills.
The land and buildings tax has been floated to replace the house and land tax and the local development tax, both of which have been criticised as regressive and based on outdated appraisal prices.
The new tax is also designed to boost revenue for local administrative organisations while lowering the government's budget burden in providing financial support.
The land and buildings tax, pending the Council of State's deliberation before seeking the National Legislative Assembly's approval, will be imposed on first homes and land used for agricultural purposes with appraisal prices starting at 50 million baht, with the rate applied to the amount exceeding 50 million baht.
Owners of first homes and farms with an appraisal price below 50 million baht will be free from the tax liability. The tax will also apply to second homes on a progressive basis, with rates of 0.03% to 0.30% for homes with an appraisal value of less than 5 million baht to more than 100 million baht.
The bill sets ceiling rates of 0.2% of appraisal value for land used for agricultural purposes, 0.5% for residences, 2% for commercial use and 5% for vacant or undeveloped land.
For vacant or undeveloped land, the tax rate will be imposed at 1% for land left vacant or unused for 1-3 years, 2% for 4-6 years and 3% for more than seven years. The bill is expected to take effect next year.
The Fiscal Policy Office recently estimated that the land and buildings tax would generate 64 billion baht a year for local development. Of the total, 60 billion baht will be contributed by commercial buildings and land and 4 billion by residences.
The source said the Finance Ministry assured local administrative organisations that income from the new tax will not be lower even though homes and agricultural land with appraisal prices not exceeding 50 million baht will be tax-exempt.