Draft land, building tax bill ‘won’t help farmers, SMEs’, says ex-MP

>> Former Democrat Party MP Atavit Suwannapakdee has pointed out certain shortcomings in a draft bill on land and building tax, saying it is not as favourable to the farm sector and SMEs as some might suggest.

His observation, posted on his Facebook page, follows last week’s cabinet approval of the long-awaited draft law on land and buildings tax designed to promote land use and narrow economic disparity.

Under the bill expected to be passed by the National Legislative Assembly by September, the tax rate for unused or vacant land is 2% for the base tax year. It is subject to increase by 0.5 percentage points every three years until it is capped at 5%.

Once in effect, the tax will be levied on first homes and land used for agricultural purposes with appraisal prices starting at 50 million baht. The rate will be applied to land value exceeding 50 million baht and the tax will also apply to second homes on a progressive basis, from 0.03% to 0.30%.

In his post, Mr Atavit has argued it is not true that only wealthy people will shoulder the tax burden because the appraisal prices for land plots used for agricultural purposes start at 50 million baht.

The tax exemption will be applied to the first land used for farm purposes, he said, meaning a second plot and the next one will be assessed.

He said SMEs which rent property and land will pay more tax under the new structure as the tax is calculated based on the estimated value of the property and land.

If the rented property is worth 100 million baht, the tax burden under the draft law will be 560,000 baht he said.

Currently the tax is assessed based on rental fees.

If an SME operator pays annual rental fee of one million baht for the land valued at 100 million baht, he will pay 12.5% of the rent, or 125,000 baht in tax.

Mr Attavit also pointed out that the new tax structure does little to encourage land developers to follow the town planning or the farmers to adhere to the government’s agricultural zoning plan.

It does not include tax incentives for development of land property in line with the town planning or farm zoning, he said.