Land Tax Seen As A Tool To Reduce Land Holdings Of The Rich

[george]

Land tax seen as a tool to reduce land holdings of the rich

BANGKOK: -- A vice dean of Thammasat University's Economics Faculty backs a proposal that the government impose a land tax, saying the move will ease concentration of land ownership in the hands of a few rich people and open more land to agriculture.

Speaking at a round table conducted by Krungthep Thurakij last week, the vice dean for student affairs at Thamamasat's Economic Faculty, Duangmanee Laovakul, said the faculty's Economic Research and Training Centre had calculated that the move would generate between Bt43.39 billion and Bt2.6 trillion per year from land tax, depending on the tax rate.

She said the proposal was a good one because it would become a tool with which the government could distribute land away from landlords and towards other sectors of the economy, especially agriculture.

For instance, research has discovered that one landowner in Bangkok holds land totalling 2,036 rai, 2 ngan and 57.3 square wah, when Bangkok's total area amounts to only 927,074 rai.

Duangmanee said that if the government announced a land tax and effectively collected the tax, it would increase the cost of holding land and could become a tool for easing the concentration of land in just a few hands.

If the government succeeds in taxing 100 per cent of the total land value, it will collect between Bt86.78 billion and Bt2.6 trillion, depending on a tax rate from 0.01 per cent to 0.3 per cent, she said.

If the government taxes only 50 per cent of all land value, it will collect between Bt43.39 billion and Bt1.3 trillion, using the same range of tax rates.

"Although it will be difficult to launch land tax laws, this tax will promote fairness and prevent the rich from dominating land-resource use," she said.

A representative of a Bantad mountain community in Trang, Boon Jung, said his community supported the government in launching land tax legislation because it would help farmers to gain more land for their crops. At present, most land across the country is owned by landlords who hardly use it, he said.

If the government introduces a land tax, this will increase the cost of holding land and may force landlords to make proper use of their land or sell it to reduce their tax burden.

However, Democrat Party MP and former deputy finance minister Pichet Phanvichartkul said that before the government could launch land tax legislation, it had to clear up the picture between Land Tax and Household Tax. Housing Business Association president Issara Boonyong said the government had to study the proposed land tax to determine whether or not it would help to solve the problem of distributing land for the use of farmers.

-- The Nation 2009-05-25