Amid the growing outcry over the planned land and buildings tax, the Fiscal Policy Office (FPO) is rushing to soothe worries by providing a two-year grace period after the law takes effect and another two years of discounted tax rates before charging the full rates.
The Finance Ministry will set up a tax exemption for the first two years after it takes effect, and homeowners and landlords need pay only half the rates in the third year and 75% in the fourth year, director-general Krisada Chinavicharana said yesterday.
The ministry recently decided to halve the maximum rates for the land and buildings tax from the previous proposal and allow depreciation deductions. They are now 0.25% for land for agricultural use, 0.5% for residential use and 2% for commercial use.
Unused or vacant land will be charged 0.5% tax, doubling every three years but not exceeding a maximum of 2% of the appraised value. The ministry previously set the ceiling rate for unused land at 4%. Moreover, owners of homes and land with an appraised value of less than 1 million baht after deducting depreciation will be exempt.
Mr Krisada said the FPO would soon launch a comparative table of the proposed and current tax rates to show they were similar. He insists the effective tax rates will be lower than the maximum rates.
The bill is expected to go before the cabinet next week.
The tax is expected to be enforced in 2017 after the Treasury Department completes appraisals of 30 million land plots. It has assessed only 7-8 million plots so far.
The bill will replace the local development tax and house and land tax, which have been criticised as regressive since they are based on outdated appraisal prices and have many waivers.
The tax is based on median prices from appraisals from 1978-81, which are far lower than present market value.
The new tax is expected to generate higher revenue for local administrative organisations, lowering the government's burden in supporting them. Public land and buildings, non-profit assets of the Crown Property Bureau, land and property of the Thai Red Cross and the UN, cemeteries and embassy premises will not be not subject to the land and buildings tax.