Ministry cancels land and building tax cut
Arkhom cites the tax burden as the reason
An aerial view of high-rise buildings in Bangkok’s central business district. Patipat Janthong
The Ministry of Finance will not consider extending the period of reduction of land and property taxes this year due to the tax burden, said Finance Minister Arkhom Termpittayapaisith.
The 90% tax cut took effect in June 2020. From 2020 to 2021, the tax cut cost state coffers about 30 billion baht a year, he said.
The ministry believes that this tax cut should not be extended, Mr. Arkhom said.
He said the tax is collected by local administrative organizations for their local development. The loss of revenue from the tax cut has forced the ministry to seek revenue elsewhere to offset the drop, Mr Arkhom said.
The government has launched a series of measures to ease the economic burden on the people caused by the pandemic, which started at the end of March 2020.
Under the law, first-time homeowners are exempt from property tax for the value of land and buildings up to 50 million baht, or 10 million baht if they only own the structures but not the ground.
For ownership of houses other than the principal, the rate is a progressive rate starting at 0.02%, varying according to the value of the land and the house.
The normal tax rate for agricultural land is 0.01 to 0.1%, while it is 0.02 to 0.1% for residential land.
The rate for land and buildings owned by individuals is 0.03 to 0.1%, while the rate for vacant land is 0.3 to 0.7%.
The government is preparing to impose taxes on certain products and end tax exemptions to ensure budgetary stability and broaden the tax base.
Mr Arkhom said last week that the taxation of profits from cryptocurrency trading and a plan to end the financial transaction tax exemption on sales of shares on the local stock exchange should help broaden the tax base and generate additional revenue for national development.
He said Thailand had not broadened the tax base for many years. Although GDP has increased over the years, tax revenues have not increased relative to GDP.
Indeed, the country offers a host of tax exemptions to support specific sectors, Arkhom said.
The Ministry of Finance forecasts an economic expansion this year of 4%.
The government has set expenditure for fiscal year 2022 at 3.10 trillion baht and projects net revenue of 2.4 trillion baht. The government should borrow 700 billion baht to make up for the budget deficit.