The Finance Ministry is also making a fresh effort to reduce public pressure by widening the ceiling tax waiver amount for residences to B1.5 million.
Based on the effective tax rates, the government will collect an estimated B200 billion, up from B25 billion contributed by the current local development tax and house and land tax, Finance Minister Sommai Phasee said after meeting with the Committee on Monetary, Finance, Banking and Financial Institutions.
The draft bill of the new land and buildings tax has been under strong pressure, as people feel too much tax burden has been placed on general home and landowners. The ministry has attempted to allay jitters by halving the ceiling tax rates, providing a tax exemption period and allowing depreciation deductions.
The recently proposed maximum rates were 0.25 per cent for land for agricultural use, 0.5 per cent for residential use and 2 per cent for commercial use and unused or vacant land. For vacant land, the effective tax rate will be doubled every three years, not exceeding a maximum of 2 per cent of the appraised value. The ministry previously set the ceiling rate for unused land at 4 per cent. The tax is expected to take effect in 2017 after the Treasury Department completes appraisals of 30 million land plots, replacing the local development tax and house and land tax, which have been criticised as regressive and based on out-of-date median prices.
Mr Sommai said the Finance Ministry would raise the maximum tax exemption amount for residences to B1.5 million after depreciation deductions, up from 1 million previously, to ease public pressure.
In addition, the tax for houses appraised between B1.5 and B5 million after depreciation deductions is discounted by 50 per cent permanently compared with the previous proposal to tax only 50 per cent in the first year for residences appraised at B1-3 million after depreciation deductions.
The ministry said it was not worried about the foregone tax revenue from the permanent tax discount, as the appraisal value, which usually increases every year, would offset it.