For the first time since the land and building levy law was promulgated three years ago, the Prayut Chan-o-cha government has found it necessary to re-introduce the full tax rate, shunning calls by some business sectors that it extend the 90% cut.
Earlier this month, Finance Minister Arkhom Termpittayapaisith ruled out any cuts. The full rate, he said, would help offset the fiscal burden, imposed by the pandemic that began in 2019, and the more recent impact of the war in Ukraine.
The 90% tax cut was said to have cost the state coffers around 35 billion baht per year during 2020-21.
The law was initiated in 2016 by Sommai Phasi who was finance minister under the then military regime, with the goal of bridging the wealth gap as it would require those owning unused land to give up their property.
It is unfortunate, however, that the law was heavily watered down, if not distorted, when it went through the regime-installed National Legislative Assembly (NLA).
Under the current law, low tax rates -- 0.01-0.1% of the property value -- are applied to land used for agriculture as against 0.03-0.1 % for owners of houses, depending on property value. Land for commercial and industrial use is subject to 0.03-0.07% tax, the same rate as unused land.
As the government is short of revenue, the full tax rates may be unavoidable. However, it may consider assistance measures for those affected, particularly the hotel sector.
At the same time, the government and lawmakers should look at ways to improve the tax to ensure that it is indeed a tool to help reduce the wealth gap.
One way this could do done is by taking into consideration criticism about the tax structure that it merely allows for land concentration among a few rich families, while groups of people whose economic production depend on the land, like farmers, hardly benefit from the law.
That said, landlessness in Thailand remains an issue as ever.
Another key weakness in the tax law is that it lacks a green area category, resulting in no tax incentives for those wanting to retain natural aspects of their land such as large trees.
The law identifies all green areas as "unused land". When the law took effect, a number of landowners frantically "developed" their land, which resulted in the loss of large trees -- done so they don't have to pay taxes.
Such untoward incidents were reported in several areas.
One of them is tambon Bang Kachao in Samut Prakan's Phra Pradaeng district, renowned for a large green area that long served as "the Lungs of Bangkok".
Local conservationists, however, have complained that the tax law prompted several landowners to suddenly feel the urge to "use" their property, and cleared the green areas, turning them into commercial plots.
Such incidents can be avoided should the government, as well as lawmakers, recognise the importance of green areas, and amend the tax law to include a clause for conservation, providing relevant incentives.
It may also start by setting up a tree registration system in each area, to help keep the issue top of mind.
In the time of climate change and also ultra-fine PM2.5 dust phenomenon, the country needs more green areas to help mitigate the resulting impacts.
The government should take a serious look into the tax law amendment, as one measure to fight environmental threats.