ACADEMICS EMBRACE NEW PROPERTY-TAX LAW

       Lecturers from Thammasat University's "Policy Watch" group back a proposed property-tax structure and urged the government to show its sincerity by enacting the new law to enhance efficiency in land use and increase in the incomes of local administrative organisations.
       Policy Watch is made up of a group of lecturers who assess the government's economic policies.
       Duangmanee Laovakul, a lecturer in the Economics Faculty at Thammasat University and a member of Policy Watch, said the property tax, which would be collected from land and building owners on the basis of property value, had been discussed for years, but it had not been enacted so far. The government should urgently push the property tax draft for the Cabinet's and Parliament's consideration.
       If the law could be enacted, it would be a landmark in Thai history, she said.
       "Society will benefit from the new property tax, which is calculated on property value basis not income basis. Tax collection will increase because of the clear criteria for property-tax collection. Tax exemption in the present law had caused inequality and problems in collection. Besides, the present property tax is at a regressive rate and quite high at 12.5 per cent, therefore it encourages many people to avoid paying tax," said Duangmanee.
       The new property tax is not collected at a progressive rate on the property value which would disperse land possession more efficiently. But it is a good start as the tax rate for wasteland, which is higher than used land, is at no less than 0.5 per cent in the first three years, after that it will be doubled but not exceed a maximum of 2 per cent.
       In the case of land used for commercial purpose, tax will be collected not exceeding 0.5 per cent of the property value, for land used as residence at not exceeding 0.1 per cent, and for land used for agricultural purpose at not more than 0.05 per cent.
       "Thus, the tax burden will be shouldered more by the higher class people than the lower ones. It will also enhance efficiency of land utilisation. During 2007-2008, there were 71,302 rai of wastelands in Bangkok representing 7.69 per cent of the city area, which have no economic value," said Duangmanee.
       However, the new property tax will not prevent land speculation, because annual land prices have increased more rapidly than tax rates.
       A land price assessment by the Treasury Department for 2008-2011, showed the land price in 75 provinces, excluding Bangkok, had increased by 6.5 per cent each year and land prices in Bangkok increased by 1.5 per cent annually. But the maximum annual property tax rate according to the draft was only 2 per cent.
       She said the new property-tax law would increase tax revenue of local administrative organisations from Bt20 billion to Bt40 billion to Bt50 billion, depending on the tax rate. Besides the local people and administrators would be encouraged to participate in democracy as they had to be responsible in management and examination in order to prevent corruption.
       "However it depends on the legislator whether they are more concerned in public interest than their own ones," said Duangmanee.
       She also presented case studies of 10 Thai politicians, who owned land and building worth Bt5.37 billion. If the new property tax is enforced, they would be collecting tax of Bt5.37 million per year with a tax rate of 0.1 per cent and Bt16.11 million per year with a tax rate of 0.3 per cent.