Land tax feeler wins few friends

Finance Minister Korn Chatikavanij's proposal to dust off a much-delayed land and building tax bill could become a prickly issue for the government which could shorten its political lifespan.

In what could be an attempt to test the waters, Mr Korn on Thursday said the Finance Ministry should give the bill serious consideration.

He said he would also give the land and building tax bill, drafted and proposed by the Fiscal Policy Office (FPO), a push if he found it appropriate.

"There is a challenge from the FPO. It says there is one tax bill which always brings down a government when it is proposed. It is the land and building bill.

"If I find it appropriate, I will give it a try. A House meeting was brought to an end when the bill was picked for consideration. But I think it is time for the country to consider this bill," said the finance minister.

The draft law, which was first proposed over a decade ago to upgrade the country's tax system, has always been met with strong opposition from the public and politicians.

The bill, which requires people to pay taxes on houses and land they own, would increase the financial burden on middle and low-income earners.

Another proposed law which has long been shelved is an inheritance tax bill which is now being studied by the FPO.

The proposed land and tax bill yesterday received a warm welcome from an adviser to Agriculture Minister Somsak Prisanananthakul who believed it would stimulate development of unused land.

He said many land plots remained under-developed because their owners simply bought them for price speculation.

Mr Somsak, however, suggested that different tax rates should be applied to avoid the impact on the poor. Minimal rates should be imposed on agricultural land while unused plots in an irrigation area should be taxed at progressive rates.

"If the law is promulgated the country will receive great benefits. Those who have huge plots but do not make use of them will [be forced by taxes to] give up their land for use," he said.

Land which is not used or developed is a "wasted asset".

Some politicians may oppose land and building taxes to protect their own interest. They are big-time land-holders.

Opposition chief whip Wittaya Buranasiri said the government was proposing the tax to pull in more revenue, to compensate for the 115-billion-baht supplementary spending budget.

He warned the government not to proceed with property taxes especially during the economic slowdown.

Bancha Pandee, an Ayutthaya farmer, disagreed with the proposed land and inheritance taxes. He said the government should not assume landowners are rich.

He said the value of land owned by farmers may exist only on paper and in some cases they are estimated at a higher rate than real market prices.

Mr Bancha said he now owns 100 rai of land and if the tax measures are in place, he will have to pay huge sums of tax when the ownership of land is given over to his children. Farmers without cash in hand would have to take out loans to pay the tax.

Theerakit Wangmuthitakul, president of Surat Thani chamber of commerce, said the tax proposal was ill-timed considering the state of the economy.

However, Bangkok Senator Rosana Tositrakul welcomed the tax proposal. She said fair distribution of wealth through tax measures should help narrow the gap between the rich and poor.

Thanant Tanpaiboon, head of a property business club in Phuket, agreed with the proposal.

Paiboon Upatatisaring, chief of the Phuket provincial administration organisation, said the tax was a good idea to share wealth.