Land tax loophole endangers our environment
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Land tax loophole endangers our environment


Much of Thailand's rich biodiversity, like this teeming coastal bog, survives on privately held land that is targeted by a tax on idle property. (Photo: Kitichate Sridith)
Much of Thailand's rich biodiversity, like this teeming coastal bog, survives on privately held land that is targeted by a tax on idle property. (Photo: Kitichate Sridith)

The public is little aware of the problem, but a new land tax is Thailand's most environmentally destructive policy in the 21st century so far. Taxing land and buildings is a standard policy around the world, and it makes good economic sense. That's why parliament in 2019 passed the law in question -- the Land and Building Tax Act, which went into effect in 2020, imposing annual tax rates ranging from 0.01% to 1.2% or more on the value of the land.

This will, of course, help strengthen Thailand's fiscal position and economic sustainability. However, the problem with our law is a clause that penalises owners of so-called "unused" or "vacant" land by charging them a much higher tax rate.

To avoid paying, owners clear their plots and plant crops in order to qualify for a lower tax rate. The clause was written to induce owners to convert their "idle" land to "productive" use in order to "stimulate" the economy. But far more value is destroyed than created this way.

An "empty" plot of land is not a wasteland. It's an ecosystem of plants, insects, birds, mammals, trees and other life. You can see such private land everywhere: by the road in the countryside, along our seashores, rivers and canals, and even in very small vacant lots in towns and cities. These millions of parcels of privately owned land help sustain our national, even regional, ecosystems. It's not just national forests and wildlife preserves that protect our natural heritage.

When landowners hire bulldozers and backhoes to rip up their properties to take advantage of the tax loophole, they are actually killing populations of plants and animals, destroying habitats and ecosystems -- reducing Thailand's biodiversity. Unless the policy is amended, it could result in some endangered species going extinct.

Worse, because the policy is national, it is causing destruction in every one of our 77 provinces. It is a disaster that is nationwide, like the floods of 2011. Yet it is entirely needless.

As soon as the act came into force in 2020, the destructive impact on private land could be seen all over Thailand. One sad example is Koh Kho Khao, an island of dunes in the Andaman Sea off the coast of the southern province of Phangnga. These seaside areas, with their dunes, wetlands and coastal bogs, harbour communities of rare, little-studied and threatened plant and animal species.

Among the important species in its bog areas are insect-eating plants, such as Drosera and Nepenthes, which are already on the endangered species list of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). You can also see "yang haeng" trees (Dipterocarpus obtusifolius), a species that is rarely seen in southern Thailand anymore. There are, of course, also insects, crustaceans, fish, amphibians, reptiles, birds, mammals and other creatures.

Since the law took effect in January 2020, most landowners there have clear-cut the vegetation on the dunes and excavated the bog areas between dunes to create artificial ponds. These places were not only habitats for species. The plants in the sand and in the bogs helped sequester carbon, assisting in our national effort to reduce climate change. Excavation destroyed the natural structure of the water table, permanently reducing the availability of underground fresh water.

The natural dune vegetation and fauna were replaced by plantations of low-value crops and trees that already grew in super-abundance in Thailand, like Casuarina, Acacia, banana and oil palm.

The ground vegetation was clear-cut. As a result, more water evaporation took place, and the soil became parched in the dry season. Fires broke out more often, and biodiversity was replaced by monoculture.

Sadly, very little real agricultural value is likely to be created by this misguided policy. Tax-shy landowners are not likely to "farm" in ways that optimize yields of our most economically valuable crops. Few of these "farms" will be linked to existing agricultural production networks and agribusiness supply chains.

We have plenty of farmland already. What's needed is to make better use of existing farmland. We don't even need jobs -- Thailand has too many jobs. We lack workers. Why, then, have a policy that creates more demand for migrant workers in low-value occupations like farm work that fails to increase real productivity and instead simply supports tax avoidance?

Besides harming nature, the policy destroys our cultural heritage. The law, as written, also pressures private owners of unused or abandoned buildings to renovate them to rent out or use. If they cannot afford to, they will sell them to new owners who might tear them down.

But many of these neglected buildings, like old wooden homes along our waterways, have great value as elements of our historic "cultural landscape," the look and pattern of traditional neighbourhoods. The government may have a new plan to conserve old towns throughout Thailand, but this tax will damage old towns throughout the country.

The land tax was passed with good intentions but without consulting experts in natural history, such as field botanists, biologists and ecologists. As a result, the list of plants that officially qualify for the low tax rate includes 51 widely cultivated species, such as banana, durian, oil palm, etc. The list was probably suggested by agronomists and forestry officials but without any opinion from scientists. Many of these crops will require the use of agricultural chemicals, which have the potential to further harm wildlife and the environment.

We can learn from countries like Brazil, which since 1934 has required owners of rural properties, including farmers, to leave a large portion of their land in a wild and natural state. The so-called "legal reserve" ratio ranges from 20% to 80% across different states. Brazil has problems with forest encroachment, but the reserve policy has sustained vast populations of wildlife throughout the nation.

It's not too late to prevent further destruction of Thailand's natural heritage. Let's revise the land tax law to encourage landowners to keep their properties in a natural state. Let's live up to the slogans in our speeches and promote real sustainability.

Kitichate Sridith is associate professor of biological science at Prince of Songkhla University. 'Heritage Matters' is a monthly column presented by The Siam Society Under Royal Patronage to promote public awareness on sustaining the architectural and cultural heritage of Thailand and the region. The views expressed here are those of the author.

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