Sluggish deliberation of a bill on the proposed land and buildings tax before the National Legislative Assembly (NLA) raises questions whether the law, part of the country's tax reform, will ever come into existence.
The bill has passed the first reading in the NLA, the first time the bill, drafted more than 20 years ago, has come this far. It is being vetted by a panel which, after six months considering the item, has asked for two more months.
But top officials at the Finance Ministry told me they have little confidence the bill, endorsed by NLA members with a strong 190:1 vote, will survive the second and third readings, given rising opposition to the tax, and disagreement among some stakeholders.
Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.
Some people believe the bill in its current form is also unfair, especially the part involving people with more than one residence who are subject to the tax even if their homes' combined value is less than the 50-million-baht ceiling for the first property.
Deputy Finance Minister Wisudhi Srisuphan said people in the provinces who move to work in Bangkok but still keep a residence in their hometowns are worried about the the bill which, if implemented, will require them to pay tax on their second residence, while allowing rich people the privilege of a 50-million-baht tax exemption for their first residence.
If we focus on fairness, the arguments surrounding this tax will be endless. Some people are against the idea of a property tax on the grounds that housing is one of the four basic needs, which is true. However, some argue a second home is an extra that should be taxed.
More importantly, the NLA's idea of cutting the exemption ceiling for the first residence from 50 million to 20 million baht to widen the number of taxpayers captured by the bill would also strengthen opposition to the measure.
According to Finance Ministry data, 11,000 homes would be subject to the tax payment if the exemption threshold was 50 million baht. But the lowered ceiling will nearly triple the number, to 30,000 homes.
A Thailand Development and Research Institute study indicates homes worth more than 20 million baht make up only 0.09% of homes in the country, while families with land plots that cost over 20 million baht account for 0.34% of total households.
This means the number of people subject to the tax is still small. Yet it's a fact that people who belong to the rich and privileged class have a louder voice than those in lower social strata.
Moreover, we should realise that this tax does not target homes or farmland. With the high exemption ceiling, only a few rich and privileged people will face the tax, while 90% or more of the population will not be affected. Not to mention that the tax rate for a house with 50-100 million baht value is relatively low -- only 0.05% of the appraised price.
But the real target of this tax is land for commercial and industrial use as well as vacant land which altogether would account for 90% of revenue from this tax, which is expected to reach 64.2 billion baht.
In this sense, this property tax is not a new measure, just an improved version of the outdated and inefficient law in place now, with major loopholes that make it possible for property owners to evade or pay an unrealistically low tax to the state.
One loophole is the use of old mean prices -- those that came into force in 1978-1982 -- for the land development tax, without consideration of the real value of the land. High exemption rates for property owners are another problem.
While the state imposes a high rate, 12.5% of yearly rent for the existing land and building tax, inefficiency and corruption in the tax collection system still remain a problem.
In practice, property owners can fabricate the rental amount and occupancy rate to avoid the tax, while tax officials may turn a blind eye to the false figures.
But the land and building tax is a crucial part for the country's tax reform. In recent years, the state has lost a huge amount of revenue after the Finance Ministry cut corporate income tax from 30% to 20% as well as cutting the top rate of personal income tax from 37% to 35%.
For nearly 20 years the state has run a budget deficit, spending more but on a shrinking income, as a result of inefficiency in the tax-collection system. But how long can the government shoulder such a fiscal burden?