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Thailand: Land and Building Tax Law to Ensure Social Justice
Source: thailand.prd.go.th
Source Date: Thursday, April 29, 2010
Focus: Citizens’ Service Delivery
Country: Thailand
Created: May 10, 2010

The Government has decided to introduce land and building taxes, replacing the existing tax regime, as a tool to create fairness in terms of land use and distribution.

The Cabinet, during its meeting on April 20, agreed in principle a draft bill on land and building taxes, which was adjusted from the existing household and local development taxes.

Farmers will not be affected by the new law, as tax exemption will be made for plots of land used for cultivation and building small houses. The draft bill will be sent to the Office of the Council of State for scrutiny.

Finance Minister Korn Chatikavanij said that the Government intended to issue the land and building tax law to create social justice, since the asset tax would be collected from wealthy people for national development, with an emphasis on the collection of income tax. All coalition partners have voiced their support for the bill to be submitted to the House of Representatives for consideration.

He said that the Ministry of Finance had an idea of not imposing a tax on four million farm families registered with the Government’s income-guarantee project. There is clear information that this group of farmers has used their farmland for agricultural purposes. As for residential areas, the size and value of the space will be taken into consideration for tax collection.

The Government is expected to earn at least 20 billion baht a year from the introduction of the land and building tax law. The Finance Minister said that it would take about two years before the new law comes into effect. A provisional clause will also be introduced for taxpayers to adjust themselves for another two years before the tax is actually collected.

The Government believes that the land and building taxes will ensure greater efficient use of property and develop unused land for greater benefit. The law will also lead to an increase in income for local administrative organizations, not the central government. Farmers and small-home owners will benefit from the law.

Prime Minister Abhisit Vejjajiva, during his weekly television program on April 25, said that details of the bill remain to be clarified through public hearings. However, he said, in principle, farmers and owners of small pieces of land for residential purposes would be exempted, and that taxes collected would be distributed to the localities and used as a Land Bank Fund.

The fund will be set up to help in the distribution of land for those in need and will be used to buy land from people who may not want to hold a large number of land plots.

Although the main objective of tax bill is to improve land use, many people expect the new law will help to narrow the income gap between the rich and the poor in Thailand.
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