The government will review tax rates proposed under the draft Land and Building Tax Act to be fair to all parties,says Somchai Sujjapongse, directorgeneral of the Fiscal Policy Office.
The draft act sets three rates of property and building tax -0.5% for commercial land and properties,0.1% for residential properties and 0.05% for agricultural properties.
The new law will replace the Building and Land Tax Act B.E.2475 and the Local Development Tax B.E.2508. It will reduce tax revenues for local authorities, who want the rates revised.
The FPO may also consider a progressive rate for high-value properties but it has yet to set a value. Residential units worth less than one million baht are expected to be exempt from the tax, but this could also change, depending on the situation when the tax is implemented, said Mr Somchai.
"The law is aimed at pushing landowners to utilise their land and to bring unused land plots into the market, because the department found that more than 90% of Thais hold less than one rai on average while the other 10% hold more than 100 rai on average," he said.
The office will carefully define "unused land" as many owners try to have unused land categorised as agricultural plots, which qualify for the lowest tax rate, said Mr Somchai.
For example, a piece of land would be defined as an agricultural plot when a certain proportion - possibly 75%is used for growing crops. Currently,some landlords try to avoid tax by growing a few trees on a large plot and claiming it as agricultural land or a public park.
Collections of taxes under the new law should start in 2012, because the Treasury Department has so far only appraised 6 million out of 31 million plots, said Mr Somchai. If the department cannot complete its task by 2012,tax will be collected according to blocks of land.
Developers are urging the office to review tax on land banks for future development. They say they cannot develop projects on all their land plots at the same time without creating an oversupply in the market.
The government should clarity the definition of several words in the bill to prevent the kind of disputes that currently arise over the collection of household tax, said Dr Supalakana Pinitpuvadol, a lecturer at Chulalongkorn University's faculty of law.
For example,"building or other building" in Article 5, which covers rafts,should clarify which rafts are included - rafts in resorts, rafts on rivers used for accommodation or rafts in theme parks, she said. Other terms needing clarification are "depreciation","maintenance cost","other properties" and "tax bases", she said.
Friday, August 28, 2009
UK FINANCIAL WATCHDOG CHIEF BACKS BANK TAX
The head of Britain's financial watchdog said in comments published on Wednesday that if needed he would back a multi-billion-pound tax onbanks as a measure to curb large bonuses for banking executives.
Adair Turner, chairman of the Financial Services Authority, said he would support taxes on the financial sector in a bid to prevent such bonuses for executives if they continued with excessive risk-taking.
Excessive risk-taking has been blamed for helping spark the global financial crisis and prompted a multi-billion pound taxpayer bailout of the British banking sector.
Lord Turner also criticised some activities of London's financial sector as "socially useless" and questioned whether it has grown too large.
"If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneartion profit," Turner said in an interview with current affairs magazine Prospect.
"Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activity and profits. And if increased capital requirements are insufficient I am happy to consier taxes on financial transactions...Tobin taxes."
A Tobin tax is a small tax on foreign exchange transactions, originally proposed by American economist James Tobin in the 1970s to discourage speculative trading.
Turner said a tax on the millions of transactions in the sector would cut banks' profits and reduce the pool of money available for bonuses.
He said the level of pay in the sector may be caused by "over-simplistic financial deregulation", describing this as the "really fundamental question".
"This is not a question that any of the politicians have focused on but I think it's an important and legitimate issue of public concern," he said.
Turner's comments were published yesterday on the front pages of several British newspapers.
Aides to Britain's finance minister Alistair Darling told the Financial Times that such taxes were not under consideration.
The comments come after the FSA earlier this month outlined new rules on bonuses for banking executives, unveiling a new code of practice that will come into effect from 2010.
Analysts argue that large bonuses, particularly in Europe and the United States, damaged the ability of leading bank executives to take well-judged business risks in the run-up to the meldown.
Adair Turner, chairman of the Financial Services Authority, said he would support taxes on the financial sector in a bid to prevent such bonuses for executives if they continued with excessive risk-taking.
Excessive risk-taking has been blamed for helping spark the global financial crisis and prompted a multi-billion pound taxpayer bailout of the British banking sector.
Lord Turner also criticised some activities of London's financial sector as "socially useless" and questioned whether it has grown too large.
"If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneartion profit," Turner said in an interview with current affairs magazine Prospect.
"Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activity and profits. And if increased capital requirements are insufficient I am happy to consier taxes on financial transactions...Tobin taxes."
A Tobin tax is a small tax on foreign exchange transactions, originally proposed by American economist James Tobin in the 1970s to discourage speculative trading.
Turner said a tax on the millions of transactions in the sector would cut banks' profits and reduce the pool of money available for bonuses.
He said the level of pay in the sector may be caused by "over-simplistic financial deregulation", describing this as the "really fundamental question".
"This is not a question that any of the politicians have focused on but I think it's an important and legitimate issue of public concern," he said.
Turner's comments were published yesterday on the front pages of several British newspapers.
Aides to Britain's finance minister Alistair Darling told the Financial Times that such taxes were not under consideration.
The comments come after the FSA earlier this month outlined new rules on bonuses for banking executives, unveiling a new code of practice that will come into effect from 2010.
Analysts argue that large bonuses, particularly in Europe and the United States, damaged the ability of leading bank executives to take well-judged business risks in the run-up to the meldown.
PROPERTY TAX TO CABINET NEXT MONTH
The Finance Ministry's Fiscal Policy Office will propose the property-tax law to the Cabinet again next month, after consideration was postponed this week.
The office's director-general Somchai Sujjapongse, at a seminar organised yesterday by the Thai Real Estate Association, Thai Condominium Association and Business Housing Association, said the law would help boost the income of provincial offices and that they could use it to develop communities.
Earlier, up to 80 per cent of community development funds came from the government, and only 20 per cent was covered by local administration revenue.
Meanwhile, he said, the government could use the law to manage land across the country, especially in cases where landlords own large tracts but refuse to do anything with them. Once the law is put in effect, most landlords will be forced to use their plots for farming or setting up businesses, he added.
Currently, at least 10 per cent of the population holds 100 rai each, while the remaining hold an average of 1 rai per person. Should the law go into effect, it would increase the tax burden on people holding large plots, so they will either be forced to reduce their property or use it to generate income, Somchai said.
According to the office, the property tax proposed will be divided into three levels. Tax for agricultural land will be no more than 0.05 per cent, that for residences 0.1 per cent and that for commercial land 0.5 per cent. But tax for undeveloped land will be 0.5 per cent for the first year, 1 per cent in the second year and will then be increased by an additional 1 percentage point every year.
Once the law is passed, the government will have to evaluate the 30 million individually owned plots across the country within two years.
So far, the Finance Ministry's Treasury Department has only evaluated 6 million plots.
The office's director-general Somchai Sujjapongse, at a seminar organised yesterday by the Thai Real Estate Association, Thai Condominium Association and Business Housing Association, said the law would help boost the income of provincial offices and that they could use it to develop communities.
Earlier, up to 80 per cent of community development funds came from the government, and only 20 per cent was covered by local administration revenue.
Meanwhile, he said, the government could use the law to manage land across the country, especially in cases where landlords own large tracts but refuse to do anything with them. Once the law is put in effect, most landlords will be forced to use their plots for farming or setting up businesses, he added.
Currently, at least 10 per cent of the population holds 100 rai each, while the remaining hold an average of 1 rai per person. Should the law go into effect, it would increase the tax burden on people holding large plots, so they will either be forced to reduce their property or use it to generate income, Somchai said.
According to the office, the property tax proposed will be divided into three levels. Tax for agricultural land will be no more than 0.05 per cent, that for residences 0.1 per cent and that for commercial land 0.5 per cent. But tax for undeveloped land will be 0.5 per cent for the first year, 1 per cent in the second year and will then be increased by an additional 1 percentage point every year.
Once the law is passed, the government will have to evaluate the 30 million individually owned plots across the country within two years.
So far, the Finance Ministry's Treasury Department has only evaluated 6 million plots.
SECOND ROUND OF GAINS FOR EXPORTERS
Another 12,500 products falling under free-trade agreements with five trading partners will be subject to zero tariff rates come January in the second phase of import-duty reduction.
Tariff elimination comes under the FTAs signed by the Kingdom with Australia, New Zealand, Japan as well as those agreed under Asean with China and South Korea.
When implementing a zero-tariff regime, the FTAs will boost the country's export competitiveness and lead to more market access.
Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said yesterday that a wide variety of products - including smoked fish, frozen squid, non-alcoholic drinks, plastic goods, tyres, refrigerators, washing machines, tapioca flour, synthetic fibres, spectacle lenses and copper sheeting - would benefit from zero tariffs from January 1, 2010.
"Thai exporters should focus more on exporting to these five markets," she said.
The implementation of the Thailand-Australia FTA in 2005 has resulted in the elimination of tariffs covering some 5,344 products.
Another 529 products will come under the zero-tariff scheme next year, including tyres, rubber gloves, air-conditioner parts, car radios and auto parts.
However, taxes on another 239 products under the commitment will not be eliminated until after next year.
The Thailand-New Zealand FTA was also agreed in 2005, under which 7,237 products were targeted for tariff elimination. The import duties on 6,058 products have already been eliminated, and another 518 products will come under the scheme next year.
Nuntawan said the Japan-Thailand Economic Partnership Agreement had already cut tariffs to zero on 7,230 products out of a total of 9,055. However, products including smoked fish, frozen squid, food products and non-alcoholic drinks will not be subject to the zero rate until next year.
The FTA under the Asean scheme with China has already eliminated tariffs on 3,906 products from the agreed total of 7,605. The two sides are committed to cutting tariffs to zero on another 2,660 products next year. These include tapioca flour, plastic products and spectacle lenses.
The Asean-South Korea FTA, which was signed this year, allows both sides to benefit from zero tariffs on 1,836 products from the total commitment of 11,703 items.
It will eliminate tariffs on another 8,961 products next year, including crude oil, sugar, tyres and copper sheeting.
Tariff elimination comes under the FTAs signed by the Kingdom with Australia, New Zealand, Japan as well as those agreed under Asean with China and South Korea.
When implementing a zero-tariff regime, the FTAs will boost the country's export competitiveness and lead to more market access.
Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said yesterday that a wide variety of products - including smoked fish, frozen squid, non-alcoholic drinks, plastic goods, tyres, refrigerators, washing machines, tapioca flour, synthetic fibres, spectacle lenses and copper sheeting - would benefit from zero tariffs from January 1, 2010.
"Thai exporters should focus more on exporting to these five markets," she said.
The implementation of the Thailand-Australia FTA in 2005 has resulted in the elimination of tariffs covering some 5,344 products.
Another 529 products will come under the zero-tariff scheme next year, including tyres, rubber gloves, air-conditioner parts, car radios and auto parts.
However, taxes on another 239 products under the commitment will not be eliminated until after next year.
The Thailand-New Zealand FTA was also agreed in 2005, under which 7,237 products were targeted for tariff elimination. The import duties on 6,058 products have already been eliminated, and another 518 products will come under the scheme next year.
Nuntawan said the Japan-Thailand Economic Partnership Agreement had already cut tariffs to zero on 7,230 products out of a total of 9,055. However, products including smoked fish, frozen squid, food products and non-alcoholic drinks will not be subject to the zero rate until next year.
The FTA under the Asean scheme with China has already eliminated tariffs on 3,906 products from the agreed total of 7,605. The two sides are committed to cutting tariffs to zero on another 2,660 products next year. These include tapioca flour, plastic products and spectacle lenses.
The Asean-South Korea FTA, which was signed this year, allows both sides to benefit from zero tariffs on 1,836 products from the total commitment of 11,703 items.
It will eliminate tariffs on another 8,961 products next year, including crude oil, sugar, tyres and copper sheeting.
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