The Finance Ministry has decided to exempt the value of buildings from the controversial land and buildings tax bill in a fresh bid to reduce public outcry, a source familiar with the issue says.
The move will lower the burden on home and building owners as only land will be levied, the source said.
Even though the government's tax revenue will be reduced from the recently estimated 200 billion baht a year if the new property tax comes into force, it will still exceed the 25 billion baht a year currently generated by the house and land tax, and local development tax, the source said.
The land and buildings tax has been floated to replace the house and land tax, and local development tax, which have criticised as regressive since they are based on outdated appraisal prices and have many waivers.
The house and land tax, and local development tax are based on median prices from appraisals from 1978-81, which are far lower than the present market value. Moreover, landlords who possess land plots of up to five rai are waived from the taxes, while those who are liable to the taxes are charged at 0.5% of the land value for land priced at no more than 30,000 baht per rai and 0.25% for land valued over 30,000 baht.
The new property tax is a priority because tax revenue is desperately needed to finance multi-trillion-baht infrastructure investment as well as to help with the government's goal of narrowing economic disparities.
The draft bill of the new tax, however, has become a hot potato as people are apprehensive that it will place too much burden on general home and land owners.
Buildings in Bangkok shot from a tower on Ratchadapisek Road. The building value is expected to not liable under the new property tax bill. KOSOL NAKACHOL
The ministry has tried in vain to allay jitters, even though it has watered down the tax charges through several proposals such as halving the ceiling tax rate, providing tax allowances, offering a grace period for tax payment and allowing depreciation deductions.
Prime Minister Prayut Chan-o-cha in March decided to shelve the bill following public outcry and requested the Finance Ministry seek ways to help reduce the burden on low-income earners.
According to the Finance Ministry's previous proposal, the bill on the land and buildings tax 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 exceed a maximum level of 4%.
The source said that the new tweak to the property tax, however, is subject to approval by Finance Minister Sommai Phasee.