Local governments must play a greater role in amending the land and building tax law, which has been in effect for five years, says Pornchai Thiraveja, director-general of the Fiscal Policy Office.
According to Mr Pornchai, the Land and Building Tax Act of 2019 empowers local administrative organisations to collect the tax to generate revenue for local development.
He said this property tax has encountered some obstacles to implementation. For example, using high-value urban land to grow limes to be charged a much cheaper tax rate than vacant land.
Local administrative organisations need to examine these issues to verify the land use.
Revising the law requires input from both taxpayers and tax collectors to find common ground, said Mr Pornchai.
He said the law aims to ensure fair and comprehensive tax collection, with rates dependent on the type of land use.
Determining land use according to the law's objectives requires discretion, said Mr Pornchai, requiring a review of the legal provisions to determine where discretion applies and whether the information for consideration is sufficient.
For instance, environmental land such as mangrove forest requires a neutral party to declare this status.
Without such a declaration, the owners might claim it as environmental land, while officials might classify it as land for profitable use, necessitating additional information.
At the end of April, the House Standing Committee on Monetary Affairs, Finance, Financial Institutions and Financial Markets met and discussed enforcement of the tax.
The panel identified problems with tax collection aligning with good taxation principles, which should be easy to understand and implement for both tax collectors and taxpayers, allowing for low collection costs.
Collection of the tax has been plagued by high operating costs and a time-consuming process, making it impractical.
In addition, the determination of tax rates has been dubbed unfair because the rates based on different land uses are not beneficial to the economy, said the committee.
The tax collection affects the real estate market and land purchases for commercial and industrial development. As a consequence, the law should be amended or repealed, said the panel.
The law stipulates tax collection based on the value of land and buildings, categorising land use into three types: agricultural land, residential land, and commercial and industrial land, including vacant land.
The tax rate for land and buildings is progressive based on the value of the land and buildings.
The rates for agricultural land start at 0.01%, with an exemption for agricultural land owned by individuals with a value not exceeding 50 million baht.
Residential land starts at a 0.02% rate, with an exemption for primary homes and land valued at no more than 50 million baht.
Commercial and industrial land starts at a 0.3% rate, while fallow and vacant land that is not utilised appropriately is taxed at the same rate as commercial and industrial land.
If the owner does not make use of vacant land, the tax rate increases by 0.3% every three years, not to exceed 3%.