Thailand’s new land and building tax law was initially seen as a welcome end to the country’s outdated property tax practices, but now it is drawing a sharp division between Thai politicians.
The controversy over the law doesn’t deal with the main intent of the law, which is to make landlords and landowners pay property taxes now based on appraised property value rather than income.
This change is smart considering tax revenue will increase over time as appraised values for real estate and land appreciate.
Politicians across the aisle also approved the fact that the law leaves land and building tax collection to local governments who are then required to spend the money on local development.
The beef between opponents and supporters of the law comes down to who the tax burden falls to–some argue that the rich will disproportionately benefit from the law.
On the one hand, homeowners will be exempt from paying taxes on their first–or only–home if it does exceed 50 million baht in appraised value, which means 99.96% of Thais are exempt.
But the law changed boosted the ceiling from tax-exempt homeownership from 20 million baht to 50 million baht–meaning those who own homes ranging from 20-50 million baht will now not be required to pay property taxes on that home, according to Thailand real estate, land, and property lawyers.
The law now places the tax burden on those who own more than one home, condo, or plot of land–even if the income of those who own more than one property isn’t exceedingly high.
Chawalit Wichayasut, chairman of the House committee on reform and legislative improvements, said that the bill is flawed across the board and must be repealed and replaced.
Chawalit, as an example, said that huge companies owning industrial land could benefit massively from effective tax cuts under the law.
He pointed out that the Laem Chabang industrial estate, who in the past paid 60 million baht per year on property taxes, could now only be required to pay around 3 million baht.
The former military government watered down the finance ministry’s proposed tax rates when passing the bill into law.
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