Thai Govt Refurbishing Home Scheme

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Govt refurbishing home scheme

Wichit Chaitrong,

Somluck Srimalee,

Sucheera Pinijparakarn

The Nation

Cabinet mulls new incentives while developers fret market has been left in a vacuum

The Cabinet is considering new incentives to counter criticism that its first-home policy will benefit only well-to-do people.

But it remains to be seen whether the new incentives will be enough to erase the impression that tax benefits under this policy mostly benefit the rich.

The Cabinet yesterday made a change to the first-home scheme it had approved earlier. Under the new rule, first-time home-buyers could directly use the incentives to offset annual tax payment, which is expected to benefit taxpayers more than the previous rule.

Earlier, the Cabinet had approved a Finance Ministry proposal to offer 10-per-cent tax rebates to first-time buyers for houses costing no more than Bt5 million. The government came under criticism for helping the rich who could afford houses priced up to that amount. The Democrats also accused the government of trying to benefit SC Asset, the property firm controlled by Shinawatra family.

Deputy Finance Minister Boonsong Teriyaphirom said a news conference would be held today to explain the new way of calculating the tax rebate. The previous package allowed first-time home-buyers to get tax refunds up to 10 per cent of the price of the property. Under the previous rule, tax incentives up to 10 per cent of a home’s price would be calculated as individual expense over five years, before computing the tax payment.

“People may be confused about the new package. The government wants to help low- and middle-income groups to own houses, so the additional package might include a waiver of specific business tax, the mortgage fee and home-transaction fee,” he said.

He said more incentives would directly affect the government’s spending plan, as it intends to run a fiscal deficit of Bt350 billion for fiscal 2012, with revenue estimated at Bt1.98 trillion against expenditure of Bt2.33 trillion.

The tax rebate is estimated to cost the government Bt12 billion.

A plan for zero-interest mortgages for first-time home-buyers will be submitted to the Cabinet next week, Deputy Finance Minister Viroon Tejapaibul said yesterday.

“I need to consult Finance Minister Thirachai [Phuvanatnaranubala] first, as the package would need government subsidy,” he told reporters.

Thirachai has just returned after attending the annual meeting of the International Monetary Fund and World Bank, Viroon said.

He said he planned to ask Government Housing Bank to provide mortgages at zero interest for three years to first-time home-buyers. House prices would be capped at Bt2 million, he said. The interest subsidy would cost an estimated Bt400 million annually, or Bt1.2 billion for three years on total loans of Bt10 billion.

The Finance Ministry will offer subsidy of Bt300 million a year and the rest would be shouldered by GH Bank, Viroon said. He said the package would also help the bank sell its non-performing assets, particularly homes in good locations, he said.

Issara Boonyoung, president of the Business Housing Association, said the government had to be clear about its policies. Home-buyers are asking property developers if they can transfer their residences now. However, the government has a tax-reduction policy and also possibly a zero-interest mortgage scheme for the first two or three years. The developers will become responsible for their loss.

“The government should have a policy to support people who buy homes but it has to be clear or the market could face a vacuum situation,” he said.

Prasert Taedullayasatit, director and chief business officer of leading property firm Pruksa Real Estate, said the market had slowed down again after the finance minister and his deputy said they would announce a new policy to drive the market. This creates hope among home-buyers as they wait for the policy to become effective.

“This has an impact on the market,” he said.

However, both policies – tax reduction of about 10 per cent of residential value, and zero interest for the first three years, have less benefit for home-buyers.

He said it would be better if the government said it did not have any policy to support the market rather than saying it was coming up with a policy and keeping everyone waiting.

Kasikornbank first senior vice president Chatchai Payuhanavee-chai said that even first-time home-buyers had no clear idea about incentives to the buyer. The bank is worried that the scheme might lead to speculative purchases to avoid losing out on the tax incentives.

The Cabinet has not made it clear whether it will offer tax privileges as a tax refund of the home price or a tax deduction. In the case of a tax deduction, buyers will benefit only if they are taxpayers. But home-buyers will benefit more if the government refunds tax to them. However, tax refunds might create speculation, as some buyers would be tempted to benefit from the refund of 10 per cent.

Normally, a buyer makes a down payment to the developer at 5 per cent of the total price of the home. If a home-buyer gets a 10-per-cent tax write-off from the Revenue Department, it would be possible for a buyer to forgo his down payment of 5 per cent to gain the 5-per-cent difference between the tax refund and the down payment.

Chatchai said developers should increase the down payment to 10 per cent of property value.

He suggested that the government should gradually hand over the tax rebate in five years and not pay the whole amount in one year, so that buyers can use the money to pay down the principal on their mortgage. It would also keep away speculators and buyers who might cancel the down payment, he said.

-- The Nation 2011-09-28

[rametindallas]

I'm beginning to think this government is incompetent as well as corrupt. Dr. Thaksin must be seething. He may have been corrupt but he wasn't imcompetent. I hope the weekly Monday Skype calls can get them back on track. The submarines, the new cars, the pay rise, Rice Mortgage, high speed rail, tablets for schoolchildren, etc. are all in flux. They are beginning to convince even me that Dr. Thaksin would be better than this lot.

[whybother]

I'm beginning to think this government is incompetent as well as corrupt. Dr. Thaksin must be seething. He may have been corrupt but he wasn't imcompetent. I hope the weekly Monday Skype calls can get them back on track. The submarines, the new cars, the pay rise, Rice Mortgage, high speed rail, tablets for schoolchildren, etc. are all in flux. They are beginning to convince even me that Dr. Thaksin would be better than this lot.

"They are beginning to convince even me that Dr. Thaksin would be better than this lot."

Maybe, that's their plan.

[Bakseedaa]

I'm beginning to think this government is incompetent as well as corrupt. Dr. Thaksin must be seething. He may have been corrupt but he wasn't imcompetent. I hope the weekly Monday Skype calls can get them back on track. The submarines, the new cars, the pay rise, Rice Mortgage, high speed rail, tablets for schoolchildren, etc. are all in flux. They are beginning to convince even me that Dr. Thaksin would be better than this lot.

This lot ARE Dr Thaksin......... do you think they do one thing without his approval....!

[Soutpeel]

I'm beginning to think this government is incompetent as well as corrupt. Dr. Thaksin must be seething. He may have been corrupt but he wasn't imcompetent.

Yeah right...... .......the Thai Elite card thing was a shining example of our man in dubai's innovative business skills and vision....

[rotary]

Do you mean to say we are not all members in the "Thai Elite" program??

I thought I was the only one who did not join.............

[Arkady]

I'm beginning to think this government is incompetent as well as corrupt. Dr. Thaksin must be seething. He may have been corrupt but he wasn't imcompetent. I hope the weekly Monday Skype calls can get them back on track. The submarines, the new cars, the pay rise, Rice Mortgage, high speed rail, tablets for schoolchildren, etc. are all in flux. They are beginning to convince even me that Dr. Thaksin would be better than this lot.

You've put your finger on it without realising it. Thaksin is play acting and is actually very happy that everything is going according to plan and that even you are beginning to think that he would be better than his current nominees, despite the fact that they are not allowed to go to the toilet without his approval.

The roadmap is like this.

1. Thaksin returns in late November, kisses the ground at Swampy where he is greeted by thousands of red shirts bussed in from up country.

2. He proceeds by Corrections Dept limousine to the specially prepared suite in the DSI prison at Laksi where he is the only prisoner, ostensibly to begin serving his sentence.

3. A few days later on 5th December he receives a royal pardon, along with a few red shirts who have been actually been sentenced and a number of common criminals.

4. The attorney-general starts work on the other outstanding cases against Thaksin extremely slowly, claiming that it is necessary to re-examine all of the evidence collated by the AEC and NACC. Thaksin is granted bail on these cases.

5. The government prepares a referendum on a new constitution that essentially reverts to the 1997 constitution with its convoluted checks and balances that proved so easy for Thaksin to brush aside in his first and second governemnts.

6. Although less 0.1% of voters read the proposed new constitution or have read the current one, they overwhelmingly approve the idea of the new constitution.

7. The new constitution comes into effect soon after the referendum.

8. The new constitution makes all actions and legislation put into effect as a result of the coup unlawful.

9. As a result of point 8 above, all outstanding charges against Thaksin are dropped and his assets case is reversed resulting in the restoration of his Bt46 billion in confiscated assets.

10. Thaksin's conviction for which he received a royal pardon is now nullified completely, having the effect of restoring his full political rights immediately.

9. PM Yingluck announces that Parliament will be dissolved within two months to pave way for elections under the new constitution.

10. Phuea Thai gains another landslide victory and Thaksin is appointed prime minister.

11. Yingluck returns to the business sector and most of her current cabinet is left out of the new government as they have to take the blame for the inadequacies of the short lived Yingluck government and make way for the newly unbanned Thai Rak Thai politicians.

11. The leaders of the 2006 coup enter into closed doors negotiations regarding their pending treason prosecutions.

12. All treason charges against the coup leaders are dropped in the spirit of reconciliation after some informal fines have been levied involving transfers between offshore bank accounts.

Fast forward to 2029.

1. Thaksin, now aged 80 announces his retirement from politics after being prime minister for a total of 23 years to a well attended televised party meeting. Several elderly women are captured fainting on TV cameras, while many more are seen sobbing uncontrollably.

2. Phantongthae Shinawatra takes over as prime minister.