Property Taxes - Why They So Low?

[brahmburgers]

Property taxes in Thailand are a joke. Or at least for outlying areas, where I happen to have secured properties. I assume taxes are also ludicrously low in the cities, don't know. However, in the countryside, property taxes are essentially non-existent. Methinks that's because so much acreage is tied to Thai VIP big shots, and they quite like avoiding taxes - as it fits with their ultra-selfish ways of going through life.

The other side of the coin is, taxes can generate lots of money for the common good. So, if taxes are wisely administered (an oxymoron in Thailand), quality of education, and infrastructure could benefit.

I vaguely recollect there was some legislation broached on this subject in Bangkok months ago, but it's not expected that any tangible improvements will come of it. When rich absentee land-holders are asked to vote whether to pay modest taxes on their property, which way do you think they'll vote?

[lannarebirth]

Asked and answered.

When Abhisit broached the subject of raising property and inheritace taxes to fund a more socially equitable society he was figuratively shot down in a hail of bullets. If the idea gets much traction, maybe figurative will change to literally.

[thaihome]

The only tax on property is the transfer fee. There was a proposal to start doing a yearly tax based on value, but that has not gone very far.

Thailand government revenue is mainly derived from income tax (both corporate and individual) and the value added tax (VAT)

[astral]

Thaihome is right, property tax is only collected when property changes hands.

A yearly tax might fund infrastructure development that is needed in each area.

[submaniac]

Why are you guys complaining about the lack of taxes? Would you prefer the way it is done in the States? Where I have to give 1/3 of my income to the government, and the money is used to buy bombs and bullets for wars I never asked for. That even if I do not reside in the USA I still have to pay taxes?

[jasreeve17]

It's a tricky one because we don't like taxes...

For a developing country with a significant group of property owners / investors you'd want a tax, wouldn't you? - like a banded stamp duty (upto 4% in the UK for the buyer), but payable by the seller. Maybe between 0.5% and 1.5% depending upon the value of property; say:

under 500,000 baht pays 0%.

500k - 1m baht pays 0.5%

1m - 3m baht pays 1%

above 3m baht pays 1.5%

These don't seem to be crazy rates that would heavily burden the sellers, but would still draw in billions for the government coffers to use wisely on developing the nation.

[swain]

Read my lips~

[swain]

These don't seem to be crazy rates that would heavily burden the sellers, but would still draw in billions for the government coffers to use wisely on developing the nation.

right!!!

[jasreeve17]

These don't seem to be crazy rates that would heavily burden the sellers, but would still draw in billions for the government coffers to use wisely on developing the nation.

right!!!

I know it's funny, well, sad, funny. But, why should it be? If we're living here, having kids here, the most forward-thinking and educated PM in the country's history (arguably) agrees it's a good idea, then (even though I understand your point and agree with it) why should it be funny?

[lannarebirth]

It's a tricky one because we don't like taxes...

For a developing country with a significant group of property owners / investors you'd want a tax, wouldn't you? - like a banded stamp duty (upto 4% in the UK for the buyer), but payable by the seller. Maybe between 0.5% and 1.5% depending upon the value of property; say:

under 500,000 baht pays 0%.

500k - 1m baht pays 0.5%

1m - 3m baht pays 1%

above 3m baht pays 1.5%

These don't seem to be crazy rates that would heavily burden the sellers, but would still draw in billions for the government coffers to use wisely on developing the nation.

I'm glad you're not the assessor. Taxes could be a fraction of that and still add substantially to government coffers. As for the issue of government applying the funds appropriately, that would be up to the citizens to oversee.

Edited September 28, 2009 by lannarebirth

[swain]

These don't seem to be crazy rates that would heavily burden the sellers, but would still draw in billions for the government coffers to use wisely on developing the nation.

right!!!

I know it's funny, well, sad, funny. But, why should it be? If we're living here, having kids here, the most forward-thinking and educated PM in the country's history (arguably) agrees it's a good idea, then (even though I understand your point and agree with it) why should it be funny?

Better to forge your own non profit or give to a group that will really solve problems. You could just like I have, commission someone to go out and fix the pot hole on the street coming to my house. I know they will never fix it. Your right its sad.. but its funny that you would imbue wisdom on the people that will be spending your tax dollars.

Edited September 28, 2009 by swain

[submaniac]

Hmm....this is reality. Say that reasonable property or other taxes are implemented. What is the likelihood that the money would actually be used by government officials for the benefit of the public, as opposed to say be embezzled or otherwise misappropriated? Really? Honestly??

I am OK with Thailand. The government offers virtually no public services/benefits. But you don't pay either. In Europe, you pay high taxes, but you get great benefits (like free health care, education, good disability benefits). In the U.S. you pay lots of taxes, and don't get squat for it.

[jasreeve17]

These don't seem to be crazy rates that would heavily burden the sellers, but would still draw in billions for the government coffers to use wisely on developing the nation.

right!!!

I know it's funny, well, sad, funny. But, why should it be? If we're living here, having kids here, the most forward-thinking and educated PM in the country's history (arguably) agrees it's a good idea, then (even though I understand your point and agree with it) why should it be funny?

Better to forge your own non profit or give to a group that will really solve problems. You could just like I have, commission someone to go out and fix the pot hole on the street coming to my house. I know they will never fix it. Your right its sad.. but its funny that you would imbue wisdom on the people that will be spending your tax dollars.

Yes, that is the reality.

The problem is that this reality can only go so far (not very)... We can either say; it's a failed state and always will be, so every man for himself. Or, mmm, not sure, but I feel a bit idealistic today, so I'll say support the notion of a fully functioning state with sound governance - this would need taxation for the health service, education... we already have many of these areas progressing nicely (the Thai health sector is very good IMO) and Thailand has great potential to join the developed nation status, in the future. That's exactly what the current man at the top is attempting to do, so he says, and he must know better than you or I.

Lannarebirth, you nearly forced me into a Scottish joke... the rates I threw out are not high by any standard. If they could be lower whilst still making a strong contribution (to the corrupt pollies retirement fund? ) then I'm all for it...

Basically, if the rates were banded and your low / low to middle folk were passed over, the high value folk hit hardest (but not stupidly hard) then even if the money was mostly misappropriated it's the high-sos stealing from other high-sos, so I don't see a down side.

[Heng]

For a gov't that has readily shown that it doesn't spend its money wisely, yeah, I think the solution would be to give it MORE money. Kinda like giving Fai or Lin down at Cassanova more of my cash to buy shoes and booze so she'll develop as a person.

Seriously though, I think the underlying issue that a lot of folks have is that they don't like the distribution of wealth. That's almost always the time the issue of property taxes/inheritance taxes gets brought up. They think that dividing up the pie will somehow make the bears and the rabbits equals, but in the end, the bears will end up with all of the pie again.

Edited September 28, 2009 by Heng

[CWMcMurray]

If any property tax system is set up there is chance that it may have the unintended consequence of causing some of the "Land Rich, money poor" Thais to be forced to sell their land to pay property taxes.

[brahmburgers]

Lots of good commentary here. In principle, I'm in favor of fair taxation, as long as there's fair dispersal of the proceeds. Unfortunately, all indications are that, in Thailand, fairness gets tossed out the window. I doubt there's one Thai government funded program that's not tainted by at least allegations of impropriety. And, as newspapers attest to every day, there are many gov't funded programs that are rife with abuses. So, in lieu of the reality of the situation in Thailand, it's probably better to maintain the status quo, even though it means rich absentee landlords will continue to hoard large tracts of land and keep them fallow and/or use them to get large loans that they never intend to pay back.

If a Thai is somehow connected to a VIP and/or big shot politician, there's essentially no limit on how much they can take out of a bank, and there's scant little chance that the bank will go pounding on doors when payments are past due.

Some of the things a fairly administered taxation program would do for Thailand:

>>> allocate funds for infrastructure that would benefit all / construction and upkeep.

>>> enable decent quality education for all who reside in Thailand, including sons and daughters of migrant workers.

>>> instigate a program to clean up Thailand's beaches and try and save what little corals are still holding on. Generally, fund a 'don't litter' campaign.

>>> provide some sort of safety net for the elderly who have little or no means.

>>> provide at least some 'animal shelters' and 'spay and neuter programs' for dogs. Are there any in Thailand?

>>> Lessen the obscenely wide gap between rich and poor.

>>> assist villages with garbage retrieval. Currently, the average village has a trash dump which is continually raided by dogs, with crap strewn all around.

>>> free up unused property for some of those who want to farm and/or have a decent patch of land upon which to reside.

Edited September 28, 2009 by brahmburgers

[Lancelot]

In the U.S. you pay lots of taxes, and don't get squat for it.

But then the salary is pretty good, isn't it

[Heng]

Lots of good commentary here. In principle, I'm in favor of fair taxation, as long as there's fair dispersal of the proceeds. Unfortunately, all indications are that, in Thailand, fairness gets tossed out the window. I doubt there's one Thai government funded program that's not tainted by at least allegations of impropriety. And, as newspapers attest to every day, there are many gov't funded programs that are rife with abuses. So, in lieu of the reality of the situation in Thailand, it's probably better to maintain the status quo, even though it means rich absentee landlords will continue to hoard large tracts of land and keep them fallow and/or use it to get large loans that they never intend to pay back.

If a Thai is somehow connected to a VIP and/or big shot politician, there's essentially no limit on how much they can take out of a bank, and there's scant little chance that the bank will go pounding on doors when payments are past due.

Some of the things a fairly administered taxation program would do for Thailand:

>>> allocate funds for infrastructure that would benefit all / construction and upkeep.

>>> enable decent quality education for all who reside in Thailand, including sons and daughters of migrant workers.

>>> instigate a program to clean up Thailand's beaches and try and save what little corals are still holding on. Generally, fund a 'don't litter' campaign.

>>> provide some sort of safety net for the elderly who have little or no means.

>>> provide at least some 'animal shelters' and 'spay and neuter programs' for dogs. Are there any in Thailand?

>>> Lessen the obscenely wide gap between rich and poor.

>>> assist villages with garbage retrieval. Currently, the average village has a trash dump which is continually raided by dogs, with crap strewn all around.

>>> free up unused property for some of those who want to farm and/or have a decent patch of land upon which to reside.

Feels like a little urban legend sounding there regarding carte blanche at the banks in the PRESENT day (but true if you're talking about back in the day say with Bangkok Metropolitan Bank). Don't you think the bank higher ups have their own connections, if not more often than not, the highest connections? IME most banks are fairly tight ships nowadays.

VIP connections here tend to pay dividends with concessions, just like anywhere else (not saying everywhere else) where such relationships are common.

Those are all pluses that can be had with the current budget. A property/inheritance tax IMO would cripple the poor more than the well to do.... unless we're talking about those "more fair" towards the poor taxes that folks like to tag on at the last minute of an argument.... "well Heng of course it wouldn't just be a 34% tax for you since you make X00k a month, we'd have to actually keep 97% of your monthly gross income as a tax so that you'd be making the ideal 25k a month that everyone should have in a *fair* Thailand."

[way2muchcoffee]

"well Heng of course it wouldn't just be a 34% tax for you since you make X00k a month, we'd have to actually keep 97% of your monthly gross income as a tax so that you'd be making the ideal 25k a month that everyone should have in a *fair* Thailand."

You're too generous! We'll actually only need about 50% in your case....

[Johpa]

Although there are lots of small landholders in the provinces, there are some very, very large and very, very influential land owners around Bangkok and the lower Chao Praya delta. And there are now some very, very large ag-businesses, such as CP, which also own large tracts of land up country. These people are in a position to control legislation and they most certainly do not want any property taxes imposed upon their rather lucrative, and often inherited properties. They prefer to take their rents in an unadulterated manner and then deposit the money offshore.

[Johpa]

Those are all pluses that can be had with the current budget. A property/inheritance tax IMO would cripple the poor more than the well to do.... unless we're talking about those "more fair" towards the poor taxes that folks like to tag on at the last minute of an argument.... "well Heng of course it wouldn't just be a 34% tax for you since you make X00k a month, we'd have to actually keep 97% of your monthly gross income as a tax so that you'd be making the ideal 25k a month that everyone should have in a *fair* Thailand."

A typical misrepresentation of a progressive graduated tax, whether it be estate, property or income tax, where the upper middle class clings to their identification with the uppermost classes to which they aspire. It is part of the Donald Trump school of logic where the Donald once opined that if he could only make, say, $10 million instead of $20 million due to taxes then he would rather be a greeter at Walmart. If you raise the taxes on the wealthy in a progressive manner they will still stay wealthy and be happy. The Donald will still be happy with his $10 million a year and his life will not be much affected if any additional income is taxes at 97%. And of course nobody is suggesting that a much smaller property owner like Heng be taxed at 97%.

[Heng]

Those are all pluses that can be had with the current budget. A property/inheritance tax IMO would cripple the poor more than the well to do.... unless we're talking about those "more fair" towards the poor taxes that folks like to tag on at the last minute of an argument.... "well Heng of course it wouldn't just be a 34% tax for you since you make X00k a month, we'd have to actually keep 97% of your monthly gross income as a tax so that you'd be making the ideal 25k a month that everyone should have in a *fair* Thailand."

A typical misrepresentation of a progressive graduated tax, whether it be estate, property or income tax, where the upper middle class clings to their identification with the uppermost classes to which they aspire. It is part of the Donald Trump school of logic where the Donald once opined that if he could only make, say, $10 million instead of $20 million due to taxes then he would rather be a greeter at Walmart. If you raise the taxes on the wealthy in a progressive manner they will still stay wealthy and be happy. The Donald will still be happy with his $10 million a year and his life will not be much affected if any additional income is taxes at 97%. And of course nobody is suggesting that a much smaller property owner like Heng be taxed at 97%.

A typical spin on socialism: call it what you like, it's you have more, thus you must share proportionately more... AND you will be just as happy. Kind of like the spin you put on the agri-giants owning much of the land and surely depositing their income abroad (there are likely more smaller property owners doing that incidentally) parking it at idle somewhere... and ignoring that much of it is actually being invested locally and abroad, creating jobs here and abroad.

I can just the same conclude that if you tax everyone the same at the same rate, the poor will still have the simple things in life to draw happiness from and won't have to be burdened with the complexities of life that often come with wealth.

[swain]

How about an alternative to taxing property.. A real comfortable feeling of security if you have land and or a house on it. You know you wont lose it. Once you have paid for your house its yours..

They might start out by shielding the low income and or small land owners to get their foot in the door.. but once its an accepted norm.. who knows where it will lead.

[nputman]

Property taxes in Thailand are a joke. Or at least for outlying areas, where I happen to have secured properties. I assume taxes are also ludicrously low in the cities, don't know. However, in the countryside, property taxes are essentially non-existent. Methinks that's because so much acreage is tied to Thai VIP big shots, and they quite like avoiding taxes - as it fits with their ultra-selfish ways of going through life.

The other side of the coin is, taxes can generate lots of money for the common good. So, if taxes are wisely administered (an oxymoron in Thailand), quality of education, and infrastructure could benefit.

I vaguely recollect there was some legislation broached on this subject in Bangkok months ago, but it's not expected that any tangible improvements will come of it. When rich absentee land-holders are asked to vote whether to pay modest taxes on their property, which way do you think they'll vote?

Yes and see what TAXATION has and is doing to the USA.

In most ways the Thai system is good in that respect.

[Johpa]

A typical spin on socialism

Having once spent several years living in a socialist commune, rest assured that a progressive tax within a capitalist and democratic country is not anything remotely like, nor any sort of spin upon socialism.

[brahmburgers]

A typical spin on socialism: call it what you like, it's you have more, thus you must share proportionately more... AND you will be just as happy. Kind of like the spin you put on the agri-giants owning much of the land and surely depositing their income abroad (there are likely more smaller property owners doing that incidentally) parking it at idle somewhere... and ignoring that much of it is actually being invested locally and abroad, creating jobs here and abroad. I can just the same conclude that if you tax everyone the same at the same rate, the poor will still have the simple things in life to draw happiness from and won't have to be burdened with the complexities of life that often come with wealth.

I venture you're an American, as I am. Americans were brought up to view 'socialism' as a bad word, just a bit less grave than Communism. Socialism, if administered by a fair-minded people, like the Scandinavians, is workable.

The quote I highlighted above in purple sounds condescending. It's as if you're saying (perhaps tongue in cheek) that poor people should appreciate their lower rung on the social ladder, and that rich people can better handle the complexities of being rich.

Yes and see what TAXATION has and is doing to the USA. In most ways the Thai system is good in that respect.

Sure there are problems with the various tax systems in the States, as you'd expect with any giant system that tries to deal with 360 million people. Despite the grave abuses within the US tax system, there are some useful services and infrastructure provided (yet the whole system needs a major overhaul). However, There not such blatant corruption (on a % basis) that one finds in Thailand. At least in the States, when someone/corp is found abusing the system there can be harsh penalties. In Thailand, no VIP can get in serious trouble. At worst, he gets transferred to an inactive post at same salary.

[Heng]

A typical spin on socialism

Having once spent several years living in a socialist commune, rest assured that a progressive tax within a capitalist and democratic country is not anything remotely like, nor any sort of spin upon socialism.

Not surprising at all. Also good to see your issue is now with semantics as well. In that case I suppose I could support a 'progressive tax within and capitalist and democratic environment... as long as it doesn't provide the less fortunate with any kind of opportunities/shortcuts/subsidies/9ror9, that the current fortunate did not have while building their wealth.' Wouldn't want to be unfair now would we?

[astral]

I am OK with Thailand. The government offers virtually no public services/benefits.

But you don't pay either.

I assume you are not married to a Thai.

[Heng]

A typical spin on socialism: call it what you like, it's you have more, thus you must share proportionately more... AND you will be just as happy. Kind of like the spin you put on the agri-giants owning much of the land and surely depositing their income abroad (there are likely more smaller property owners doing that incidentally) parking it at idle somewhere... and ignoring that much of it is actually being invested locally and abroad, creating jobs here and abroad. I can just the same conclude that if you tax everyone the same at the same rate, the poor will still have the simple things in life to draw happiness from and won't have to be burdened with the complexities of life that often come with wealth.

I venture you're an American, as I am. Americans were brought up to view 'socialism' as a bad word, just a bit less grave than Communism. Socialism, if administered by a fair-minded people, like the Scandinavians, is workable.

Yes, Thai of Chinese descent/born and raised Texan. I don't view it as a good or bad word per se, I just don't find it desireable as a social system outside of the family. But to each his own. In many ways, the most successful families in the world are somewhat socialist (given, it's hardly a black and white concept itself) in nature within the confines of their families: resources are pooled/shared/redistributed/reallocated to the weaker elements of the family all the time. It can be incredibly difficult to manage a 'socialist' family with a dozen different interests. IMO it's near impossible to manage one with millions of different interests. And at some level, in a socialist system on a country level there is an implication that someone out there isn't taking care of their family member and cheating the system (even in a country as well managed as Sweden or Norway: with impressively low numbers of say homeless people the low thousands), and thus we are adding an additional family member to your well managed household. That's my disagreement with it. Just because it's nearly out of sight and mind, doesn't mean it's fair and not cheating.

The quote I highlighted above in purple sounds condescending. It's as if you're saying (perhaps tongue in cheek) that poor people should appreciate their lower rung on the social ladder, and that rich people can better handle the complexities of being rich.

Yeah, you need to look at it in context. I was matching the tone of the post I was replying to. People should appreciate wherever they are on the social ladder, and at the same time, they should appreciate that every single action one takes, and that includes as a family line, generation upon generation, will result in your social and financial status in the present.... so it's by no means permanent, you can always move up or down... but not by simply hoping that they are going to do a huge massive do-over.

[lioness]

The only tax on property is the transfer fee. There was a proposal to start doing a yearly tax based on value, but that has not gone very far.

Thailand government revenue is mainly derived from income tax (both corporate and individual) and the value added tax (VAT)

Everyone I know pays land tax, even on land not registered with the lands department. We have both types. The one that is registered ( Chanort ) we pay 120 Baht a year, and the other one we pay 59 Baht a year.

Our government authority for this doesn't send any reminders in the post, it is up to the land owner to remember, just paid ours this morning 5 months late and has to pay an extra 4 Baht late fee.