The National Legislative Assembly (NLA) yesterday unanimously passed a long-awaited bill on land and buildings tax, which backers said would support the effective use of land and be in line with international standards on property tax.
Lawmakers yesterday deliberated the bill section-by-section in the second reading before voting 169-0, with three abstentions, to pass it in the third reading.
The land and buildings tax will replace the regressive house and land tax and the local development tax systems, which have drawn criticism for being archaic.
During the second reading, several NLA members voiced concerns about the new tax rates, saying the levy obligations could affect farmers and landlords whose properties are located in areas where land appraisal prices could potentially rise in the future.
They were also worried about senior citizens who may not have income but are obliged to pay tax.
Some disagreed with a section that stipulates that seized land can be auctioned off by the state without having to seek approval by the court, saying the land could fall into the hands of investors too easily.
Meanwhile, a government representative, who sat on the NLA committee vetting the bill, responded that studies had been carried out before the bill was introduced and stressed that 97% of farmers would not be affected by the legislation.
Deputy Finance Minister Wisudhi Srisuphan, who chaired the bill-vetting committee, thanked lawmakers for pushing the legislation through.
He emphasised that the bill would help strengthen the country's economy and fine-tune the property tax system to comply with the international standard.
"The bill would encourage the use of land and provide funds for local bodies to develop their areas," said Mr Wisudhi.
According to the bill, land used for agricultural purposes with appraisal prices of up to 75 million baht will be taxed at a rate of 0.01%, while land valued between 75-100 million baht will be taxed at 0.03%. Land with a price between 100-500 million would be taxed at 0.05%.
Regarding land and buildings used for residence, those with appraisal prices of up to 50 million baht will be taxed at a rate of 0.02%, those from 50-75 million baht will be taxed at 0.03%, between 75-100 million baht at 0.05%, and those valued at 100 million baht or above will be taxed at 0.1%.
In terms of first home owners, a tax exemption will be applied to the first 50 million baht of the appraisal prices of their houses in the event that they own both the home and the land.
Those who only own houses, but not land, would be subject to tax exemption for the first 10 million of their houses' appraisal prices.
In relation to land used for commercial purposes, a tax rate of 0.3% will be applied to land worth up to 50 million baht, 0.4% to land worth between 50 and 200 million baht, 0.5% for land valued between 200 million baht and one billion baht and 0.6% to land with a price tag of 1-5 billion and 0.7% to land worth 5 billion baht and above.
For undeveloped land, a tax rate of 0.3% will be applied and it will increase by 0.3% every three years; however, it will be capped at 3%.
The new 94-section land and building taxation law will be enforced immediately upon its publication in the Royal Gazette, but actual tax collection will commence from Jan 1, 2020.