Bangkok’s call to restore tax on rich landowners rejected by Finance Ministry
The Finance Ministry has rejected a call from Bangkok’s governor to restore the old property tax law, insisting the current tax is fairer and more up to date.
Bangkok Governor Chadchart Sittipunt has called for the new government to reinstate the old tax to ensure higher revenue for local administrations.
Chadchart cited shopping mall-rich Phaya Thai district, where he said revenue had fallen from 10.7 million baht per year previously to 1.08 million baht under the new law.
Chadchart said the old land and buildings tax collected 12.5% of sales and rent but revenue had fallen under the new tax, which is based on land value alone.
A Finance Ministry source countered that Phaya Thai district’s low revenue in 2021 and 2022 was due to the 90% tax cut handed to businesses to soften Covid-19 impacts.
The ministry is confident that restoration of the new land tax to the full rate will see Bangkok’s land tax revenue return to the 15 billion baht it received in 2019 under the old tax, the source told Thansetthakij news outlet.
The source said it had taken over 10 years to implement the new tax, which aimed to help local administrations earn sufficient revenue so they did not have to rely on budget from the central government.
Up until 2020, the 7,800 local administrations around the country received about 30 billion baht per year under the old tax, according to Finance Ministry data.
The new land and building tax act was enforced in 2020, but then reduced by 90% in its first and second year due to the pandemic.
The Bangkok Metropolitan Administration (BMA) collected 1.256 billion in land tax in 2020 and 1.802 billion in 2021.
The tax rate was fully restored in 2022, when the BMA collected 12.347 as of September 2022.
This year, the Finance Ministry cut the land tax by 15% after estimating revenue of 30 billion baht under new median land prices.
The new land and building tax is fairer than its predecessor, said Wutthipong Jittungsakul, Finance Ministry spokesman and Fiscal Policy Office adviser. He said it imposes 34 different rates on land and property owners, based on their property assets.
The Finance Ministry has also rejected Chadchart’s call to raise the tax rate for land in commercial areas used for agricultural purposes.
Chadchart had proposed the full rate of 0.15% instead of 0.01-0.1% be levied on empty city plots where bananas or other crops are planted – thus avoiding the commercial rate.
The ministry said the proposal could not be implemented as it would discriminate against certain landowners.
