Land Act rates to be reviewed

       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.