The Finance Ministry has proposed to raise the tax exemption limits for land and buildings to 2 million baht worth of the appraisal price in a bid to alleviate the financial burden on low-income earners.
Finance Minister Sommai Phasee yesterday said two options were being weighed — setting the exemption limit on the land and buildings tax at 50% of the appraised value up to 2 million baht; or a 2-million-baht tax waiver.
Property owners will then be levied for the portion of the appraisal value over 2 million baht.
Earlier, the Fiscal Policy Office proposed land and buildings valued at more than 1 million baht be subject to tax.
The wider tax waiver could help to relieve the tax burden of low-income earners, as appraisal prices for their homes will increase in the future, Mr Sommai said.
The bill on the land and buildings tax has set maximum rates at 0.5% for land for agricultural use, 1% for residential use and 4% for commercial use.
Unused or vacant land will be charged at a progressive rate every three years but not exceeding a maximum level of 4% of the appraised value.
Mr Sommai insisted the new tax would not create a significant burden for homeowners since the charged rate would be lower than the maximum level.
The draft bill on land and buildings tax is expected to seek cabinet approval in the next two weeks and take effect in 2017 after the Treasury Department has completed individual appraisals of 30 million land plots. It has completed assessments on only 7-8 million plots.
The Finance Ministry will consider waiving the tax for land banks held by property developers less than three years to prevent them from passing on the tax burden to consumers.
The bill will replace the local development tax and house and land tax, which have been criticised as regressive and unenforced since they are based on outdated appraisal prices and have many waivers. At present, property of up to five rai is exempt from the local development tax.
The new tax is expected to generate higher revenue for local administrative organisations than the previous taxes.