TAXATION

PROPERTY, INHERITANCE TAXES CONSIDERED

Wichit Chantanusornsiri

Long-proposed land and inheritance taxes could finally become law under the Samak Sundaravej government.

Finance Minister Surapong Suebwonglee said he would submit an oft-delayed land and building law to the cabinet for approval next month.

The draft law would give the government authority to collect annual taxes on land and properties to help finance local public services.

Currently the government only collects taxes based on lease revenues earned on property and buildings, with the tax now set at 12.5%.

But Dr Surapong said the new law, first proposed over a decade ago, should be implemented to help upgrade the country's tax system to match international practices.

Revenues gained from the property tax would be used to finance operations by local administrations, but Dr Surapong added that the principle of the tax, rather than the actual money itself, was the greater priority.

"Vehicle owners currently pay a tax each year. Why should property owners be any different?" he asked.

The Finance Ministry also wants to revive proposals to impose an inheritance tax, which like the land tax idea, has long been shelved from passage due to fierce political opposition.

The land and building law will replace existing laws and impose a maximum annual tax of 0.5% based on current property valuations. A committee made up of the finance permanent secretary and other senior technocrats will be responsible for setting actual tax rates.

The draft law calls for a two-year grace period before actual taxes are collected from the public.

Tax rates will vary based on the type and use of a given property plot, with residential properties charged no more than 0.1% of valuation prices, farm land capped at 0.05% and undeveloped land set at 0.5%.

As an incentive for landowners to develop their holdings, undeveloped land will see annual tax rates doubled every three years up to a maximum of 2% of valuation prices.