Thai opinion: Home tax would have the poorer folks weeping

[webfact]

VENUS' VISION
Home tax would have the poorer folks weeping
Veena Thoopkrajae
The Nation

BANGKOK: -- There's a saying: "Little birds build nests according to their size." But in big cities, you can't buy a nest for less than Bt1 million nowadays. That's why a proposed land and property tax is worrying many little birds. If it came into effect, it would mean virtually every homeowner would be subject to taxation.

Originally scheduled to go before Cabinet this month, the Finance Ministry's land and property tax has been delayed for more study following heavy criticism. The intention is to boost tax revenue from landowners at least sixfold.

It sounds like a good idea for the country's coffers, but taxpayers are upset, and rightly so. The very first clause in the legislation says houses and land worth more than Bt1 million would be subject to the new tax. That's pointed directly at most people who own houses in Bangkok and other big cities. "Where would anyone find a house worth less than Bt1 million these days?" has been a frequent lament since the tax law was unveiled.

The sub-million-baht house that's exempt from the proposed tax scheme is surely scarce in these times. It will be even rarer by the time the law takes effect, ostensibly two years from now. How could the law possibly be applicable in the future? The policy-makers should ask around - they'd soon discover how few people live in houses valued under Bt1 million.

Mounting a defence, the authorities note that land and property tax is in place in more than 40 countries and ought to be affordable for anyone who owns a house and also pays the annual car tax.

A large segment of the public begs to differ. They already pay income tax as well as value-added tax, and the last thing they want to hear about is further extractions. Most people who've bought homes are still paying for them in instalments, a monthly burden tacked onto car expenses and other bills.

They are the little birds struggling to build the right-size nest. And they are doing it without any help from the government.

If the government wants more income, it should restructure the tax system to get more out of the high-income bracket rather than squeezing money out of the "have-nots" and "have-little". It could tax only those with second homes. And it could bite the bullet and implement the long-delayed inheritance tax. How about more effective taxes on savings accounts and stock trading, two areas left untouched?

Instead, homeowners are feeling like easy targets.

Are they being "punished"? The government insists that the property tax would benefit the country by improving land use and making it difficult to speculate on property. No one would leave land undeveloped as long as it's being taxed, it says. The logic no doubt does stand up in other countries, but in Thailand we can hardly guarantee the same results.

Our policymakers are being naive if they believe the property tax would prevent property speculation. Wealthier investors would happily pay the tax knowing that hefty profits were forthcoming later on. None of the major landlords in Bangkok would see the tax as an obstacle to holding on to undeveloped land.

Instead the authorities have chosen the usual target, an easier mark by far - the middle and lower-middle classes. These are the people who struggle to keep up with soaring living expenses, rising inflation and tax after tax.

The land and property tax is not an overt evil in itself, but it would certainly open a can of worms. The existing tax structure is already viewed as unjust. Wealthier people handily derive far more benefit from income tax returns by deducting life insurance, equity funds, the Retirement Mutual Fund and domestic travel expenses.

Tax, like death, cannot be avoided. But, to people working their socks off to own a house, if the government needs more money, it should instead be targeting the big birds with heavy pockets. It would be much fairer to fill state coffers with cash from the property tycoons who turn land into gold rather than stealing the nest eggs of the smaller income earners.

Source: http://www.nationmultimedia.com/opinion/Home-tax-would-have-the-poorer-folks-weeping-30255626.html


-- The Nation 2015-03-09

[marko kok prong]

I live in the country,but would this be like Rates that are paid in the Uk and Australia?

[Costas2008]

They had it cushy for many years without paying any tax.

About time things change.

They will weep at the beginning, they will get used later.

We all paid home and land tax back in the old country.

Why should Thailand be different?

[theguyfromanotherforum]

Greeks pay taxes?

[96tehtarp]

"Originally scheduled to go before Cabinet this month, the Finance Ministry's land and property tax has been delayed for more study following heavy criticism."

Flip-flop.

In this typical scenario the Thai authorities have yet again floated a poorly planned, ill thought out proposal only to realize it is totally impractical and unworkable and withdrawn it almost immediately.

[Mango Bob]

You pay a tax but what services do you get for this?

[Stradavarius37]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

"Originally scheduled to go before Cabinet this month, the Finance Ministry's land and property tax has been delayed for more study following heavy criticism."

Flip-flop.

In this typical scenario the Thai authorities have yet again floated a poorly planned, ill thought out proposal only to realize it is totally impractical and unworkable and withdrawn it almost immediately.

Where does it say its been withdrawn?

[NextStationBangkok]

Taxing rich may not help, because most of the house owners are Chinese decedents, and 10 of them live together, and they will own 20 houses for renting out someone. Most rural Thai's migrate here with small families even cannot afford to rent a house in central Bangkok, they come about 40-60 KMs away from city. Chinese decedents don't mind paying any tax to hold the house, because they can increase the rent substantially. This is the core issue in Thai society and the imbalance between rural Thai's and fluent Chinese families in Bangkok.

The only way to resolve the issue is 25% of the any new apartments should be allocated to poor income earners for a reasonable price about 25% less than market price set by the developers, and they should come up with lottery scheme to allot a house for those families don't own a single house in Bangkok.

Edited March 9, 2015 by NextStationBangkok

[rubl]

Maybe a few more laws are needed and some 'differentiation'.

- clearly define 'property', 'house', 'owner', 'empty' and 'being lived in' and 'living in by owner'

- tax homes which have been empty for more than six to twelve months

(- this may prevent speculation and will be disliked by property developers)

- tax depending on value of property

- tax depending on who lives in a property (owner, relatives, others)

- put legal framework in place to avoid rents increase disproportionally with tax added

- etc., etc.

Should be fun, even in the Western World this creates stress.

[96tehtarp]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

"Originally scheduled to go before Cabinet this month, the Finance Ministry's land and property tax has been delayed for more study following heavy criticism."

Flip-flop.

In this typical scenario the Thai authorities have yet again floated a poorly planned, ill thought out proposal only to realize it is totally impractical and unworkable and withdrawn it almost immediately.

Where does it say its been withdrawn?

Delayed... yes, it has been delayed. To actually say it has been withdrawn would involve quite a bit of loss of face for some. Delayed not withdrawn. I stand corrected.

[Robby nz]

This will happen and it should have happened years ago if the Yingluck Govt hadn't dropped the idea that was put forward by the Abhisit Govt and had already been before the Council of state and approved.

With a bit of luck the rethink of this will include an increase in the base value to something like 2.5 or 3 million, after all the whole point of it is to hit the rich and not the poor or lower middle class.

Incidentally those who are proposing this tax would also be caught by it.

[Commerce]

They had it cushy for many years without paying any tax.

About time things change.

They will weep at the beginning, they will get used later.

We all paid home and land tax back in the old country.

Why should Thailand be different?

I can only think that either: 1) you own no property, or 2) you are a Greek shipping magnate's off-spring.

Stop being so nieve. Your old country, nor any other, has absolutely anything to do with the financial ladders set in Thailand.

[cooked]

Most rural people will not be paying this tax. In our little village there are maybe 5 houses worth more than one million that is to say they paid more than that to build. However we come to the actual value. Who is going to go around valuing houses? Some decent, upstanding person? Who is going to pay good money for an old house built by a Farang a long way out of town?

I can see all kinds of loop holes and work arounds popping up pretty quickly. Now if you were talking about TEN or FIVE million then you would be getting somewhere.

Young Thais buying new houses in town for 2 - 3 million will, as all of us do, calculate their budget to the last Baht. Another ฿30 000 a year? oh boy.

[ratcatcher]

"Where would anyone find a house worth less than Bt1 million these days?"

I think the author of this little plum ought to get out of his / her ivory tower one day and take a better look at the great city known by Thais as Krungthep.......etc.

There are hundreds of thousands, maybe even millions of "houses" (homes) worth less than B1 million.

One cannot travel by train from Hua Lampong without seeing mile after mile of shacks and run down houses alongside the tracks.

Just about every klong has waterside structures that are used as dwelling places by poor people. Of course some klong properties are quite "des-res" and attractive, but the majority are shacks with tin roofs clustered side by side for miles.

Because of its unplanned growth there are huge communities of slum dwellers all over the city. These people may not be financially well off, but they all have a sense of community, something often lacking in the hi-so moobaans that cost millions to enter.

[Commerce]

"Where would anyone find a house worth less than Bt1 million these days?"

I think the author of this little plum ought to get out of his / her ivory tower one day and take a better look at the great city known by Thais as Krungthep.......etc.

There are hundreds of thousands, maybe even millions of "houses" (homes) worth less than B1 million.

One cannot travel by train from Hua Lampong without seeing mile after mile of shacks and run down houses alongside the tracks.

Just about every klong has waterside structures that are used as dwelling places by poor people. Of course some klong properties are quite "des-res" and attractive, but the majority are shacks with tin roofs clustered side by side for miles.

Because of its unplanned growth there are huge communities of slum dwellers all over the city. These people may not be financially well off, but they all have a sense of community, something often lacking in the hi-so moobaans that cost millions to enter.

KT1.jpgKT2.jpgKT3.jpg

KT4.jpgKT5.jpgKT6.jpg

The greatest sadness about such as you have described is that the majority, as you rightly pointed out, have a sense of community; and yet it seems after this week's announcement, certainly in and around BKK, the holders are being targeted into moving. A recent article stated that government help would be available to rehouse such, mainly families - yet nothing was explained about exactly how or where.

In addition, nothing has been mentioned pertaining to such that this new tax would be retrospective for all properties previously purchased, or only new properties - or am I wrong? To implement retrospective tax laws is very, very dangerous ground, and could have millions in upheaval and anger. I jointly own my own home with my wife within a mortgage agreement, for which of course there was no tax, and there is no way after what I invested to secure the mortgage will I ever pay any additional tax. I'd sooner sell the <deleted>er to a Thai, and let them pay the tax. My mortgage payments are 3 times the amount of a very large condo, and there is no way I would accept retrospective changes to my signed agreements.

In essence, is this intended to be a new law, or applicable to previously obtained property throughout the land?

[Prbkk]

This is a stupid proposal. The better alternative is to increase the VAT ( excluding food and a few essentials) and try harder to eliminate the black/cash economy. Already the Gini coefficient is the highest in Asia by a long measure but this proposal will hurt the poor more than the rich and further worsen inequalities. Of course it will be supported by his mates from 'the big end of town'.

[trogers]

"Where would anyone find a house worth less than Bt1 million these days?"

I think the author of this little plum ought to get out of his / her ivory tower one day and take a better look at the great city known by Thais as Krungthep.......etc.

There are hundreds of thousands, maybe even millions of "houses" (homes) worth less than B1 million.

One cannot travel by train from Hua Lampong without seeing mile after mile of shacks and run down houses alongside the tracks.

Just about every klong has waterside structures that are used as dwelling places by poor people. Of course some klong properties are quite "des-res" and attractive, but the majority are shacks with tin roofs clustered side by side for miles.

Because of its unplanned growth there are huge communities of slum dwellers all over the city. These people may not be financially well off, but they all have a sense of community, something often lacking in the hi-so moobaans that cost millions to enter.

KT1.jpgKT2.jpgKT3.jpg

KT4.jpgKT5.jpgKT6.jpg

The greatest sadness about such as you have described is that the majority, as you rightly pointed out, have a sense of community; and yet it seems after this week's announcement, certainly in and around BKK, the holders are being targeted into moving. A recent article stated that government help would be available to rehouse such, mainly families - yet nothing was explained about exactly how or where.

In addition, nothing has been mentioned pertaining to such that this new tax would be retrospective for all properties previously purchased, or only new properties - or am I wrong? To implement retrospective tax laws is very, very dangerous ground, and could have millions in upheaval and anger. I jointly own my own home with my wife within a mortgage agreement, for which of course there was no tax, and there is no way after what I invested to secure the mortgage will I ever pay any additional tax. I'd sooner sell the <deleted>er to a Thai, and let them pay the tax. My mortgage payments are 3 times the amount of a very large condo, and there is no way I would accept retrospective changes to my signed agreements.

In essence, is this intended to be a new law, or applicable to previously obtained property throughout the land?

You don't own a property asset, you don't pay taxes on it. You have two choices: rent or buy in your own country.

[harryfrompattaya]

More money to get from Farangs as their wives will be expected to pay for everyone in the family maybe even the village

[trogers]

More money to get from Farangs as their wives will be expected to pay for everyone in the family maybe even the village

Ahhh...the privilege of being the Hi-so of the village. No better way to show it and be loved...

[Commerce]

This is a stupid proposal. The better alternative is to increase the VAT ( excluding food and a few essentials) and try harder to eliminate the black/cash economy. Already the Gini coefficient is the highest in Asia by a long measure but this proposal will hurt the poor more than the rich and further worsen inequalities. Of course it will be supported by his mates from 'the big end of town'.

My Q again Prbkk, is this proposal considered to be implemented retrospectively? If from new, that gives people alternative choices and fair choices, to some degree (although very negative ones for the lesser off). If it is a blanket decision about all properties that currently exist, and all owners, renters, mortgagees, etc, what so called 'happiness' is that going to achieve?

[Commerce]

"Where would anyone find a house worth less than Bt1 million these days?"

I think the author of this little plum ought to get out of his / her ivory tower one day and take a better look at the great city known by Thais as Krungthep.......etc.

There are hundreds of thousands, maybe even millions of "houses" (homes) worth less than B1 million.

One cannot travel by train from Hua Lampong without seeing mile after mile of shacks and run down houses alongside the tracks.

Just about every klong has waterside structures that are used as dwelling places by poor people. Of course some klong properties are quite "des-res" and attractive, but the majority are shacks with tin roofs clustered side by side for miles.

Because of its unplanned growth there are huge communities of slum dwellers all over the city. These people may not be financially well off, but they all have a sense of community, something often lacking in the hi-so moobaans that cost millions to enter.

KT1.jpgKT2.jpgKT3.jpg

KT4.jpgKT5.jpgKT6.jpg

The greatest sadness about such as you have described is that the majority, as you rightly pointed out, have a sense of community; and yet it seems after this week's announcement, certainly in and around BKK, the holders are being targeted into moving. A recent article stated that government help would be available to rehouse such, mainly families - yet nothing was explained about exactly how or where.

In addition, nothing has been mentioned pertaining to such that this new tax would be retrospective for all properties previously purchased, or only new properties - or am I wrong? To implement retrospective tax laws is very, very dangerous ground, and could have millions in upheaval and anger. I jointly own my own home with my wife within a mortgage agreement, for which of course there was no tax, and there is no way after what I invested to secure the mortgage will I ever pay any additional tax. I'd sooner sell the <deleted>er to a Thai, and let them pay the tax. My mortgage payments are 3 times the amount of a very large condo, and there is no way I would accept retrospective changes to my signed agreements.

In essence, is this intended to be a new law, or applicable to previously obtained property throughout the land?

You don't own a property asset, you don't pay taxes on it. You have two choices: rent or buy in your own country.

Not quite that simple. Our mortgage is in joint names through Siam Bank, and it's legitimate. There is no way my wife (Thai obv) would also pay additional tax on a retrospective agreement. I'm also sure there are multi-millions of Thais who would argue the same. So you're suggesting that they would propose my wife rent, if she objected to a new retrospective tax? The country would be in uproar - believe me. Yet it doesn't seem that anybody is able to answer my operative words - retrospective tax??

[gabruce]

They had it cushy for many years without paying any tax.

About time things change.

They will weep at the beginning, they will get used later.

We all paid home and land tax back in the old country.

Why should Thailand be different?

Why shouldn't Thailand be different?

If your neighbour smokes does that mean you should too? Even if all your neighbours smoke you should refrain from smoking.

[mahjongguy]

"...it doesn't seem that anybody is able to answer my operative words - retrospective tax??"

It is a tax applied to the current value of a property (land + buildings). Call that retrospective if you will.

The proposed structure for residential land is:

- first million baht excluded

- second and third million baht taxed at 0.05% of evaluation

- beyond three million taxed at 0.1%.

[rubl]

This will happen and it should have happened years ago if the Yingluck Govt hadn't dropped the idea that was put forward by the Abhisit Govt and had already been before the Council of state and approved.

With a bit of luck the rethink of this will include an increase in the base value to something like 2.5 or 3 million, after all the whole point of it is to hit the rich and not the poor or lower middle class.

Incidentally those who are proposing this tax would also be caught by it.

Well, to be fair a home tax would have caused some problems with the to be implemented in the first year 'first home owner' policy and according to the OP would also effect the 'first car owner' policy. Politicians like to save negative effects for the next government, in Pheu Thai case for 'later'.

[Commerce]

"...it doesn't seem that anybody is able to answer my operative words - retrospective tax??"

It is a tax applied to the current value of a property (land + buildings). Call that retrospective if you will.

The proposed structure for residential land is:

- first million baht excluded

- second and third million baht taxed at 0.05% of evaluation

- beyond three million taxed at 0.1%.

Thank you. Do you have a link?

Also, is that per annum or a one-off payment? That's a lot of dosh!!

[EvilDrSomkid]

So, everybody up in arms about this, but very little actual numbers or facts. Only that the tax will apply to "houses" or "properties" worth above 1million.

Q1: What is the tax rate?

Q2: Is it progressive?

Q2: Who will assay the property/house value?

Forgive me for being cynical, but I think the rich land owners will find "loop holes" to avoid this tax.

Like they do on their Lambos and Porsches.

edit:

The proposed structure for residential land is:

- first million baht excluded

- second and third million baht taxed at 0.05% of evaluation

- beyond three million taxed at 0.1%.

Q1 and 2 answered, but where does this wisdom come from?

Edited March 9, 2015 by EvilDrSomkid

[rubl]

"Where would anyone find a house worth less than Bt1 million these days?"

I think the author of this little plum ought to get out of his / her ivory tower one day and take a better look at the great city known by Thais as Krungthep.......etc.

There are hundreds of thousands, maybe even millions of "houses" (homes) worth less than B1 million.

One cannot travel by train from Hua Lampong without seeing mile after mile of shacks and run down houses alongside the tracks.

Just about every klong has waterside structures that are used as dwelling places by poor people. Of course some klong properties are quite "des-res" and attractive, but the majority are shacks with tin roofs clustered side by side for miles.

Because of its unplanned growth there are huge communities of slum dwellers all over the city. These people may not be financially well off, but they all have a sense of community, something often lacking in the hi-so moobaans that cost millions to enter.

KT1.jpgKT2.jpgKT3.jpg

KT4.jpgKT5.jpgKT6.jpg

The greatest sadness about such as you have described is that the majority, as you rightly pointed out, have a sense of community; and yet it seems after this week's announcement, certainly in and around BKK, the holders are being targeted into moving. A recent article stated that government help would be available to rehouse such, mainly families - yet nothing was explained about exactly how or where.

In addition, nothing has been mentioned pertaining to such that this new tax would be retrospective for all properties previously purchased, or only new properties - or am I wrong? To implement retrospective tax laws is very, very dangerous ground, and could have millions in upheaval and anger. I jointly own my own home with my wife within a mortgage agreement, for which of course there was no tax, and there is no way after what I invested to secure the mortgage will I ever pay any additional tax. I'd sooner sell the <deleted>er to a Thai, and let them pay the tax. My mortgage payments are 3 times the amount of a very large condo, and there is no way I would accept retrospective changes to my signed agreements.

In essence, is this intended to be a new law, or applicable to previously obtained property throughout the land?

I'm afraid that like in the Western World you'd have no choice, you would pay appropriate taxes. Just like your salary would be taxed according to sometimes updated scales, or the increase in VAT. No choice.

[rubl]

This is a stupid proposal. The better alternative is to increase the VAT ( excluding food and a few essentials) and try harder to eliminate the black/cash economy. Already the Gini coefficient is the highest in Asia by a long measure but this proposal will hurt the poor more than the rich and further worsen inequalities. Of course it will be supported by his mates from 'the big end of town'.

The VAT is paid by all on everything you buy. As such an increase in VAT would effect poor people even more than a new house tax law. IMHO.

[rubl]

I may have erred.

Is the housing tax a property tax to be paid when buying/selling a house, or is it a tax yearly recurring ?

[EvilDrSomkid]

In our case, maybe 5000 baht a year tax. Hmm. Might be manageable.

There will be a very lucrative business in "low" valuations.

edit: If your place is worth 2mil, you pay 500 baht a year. Boohoo. So expensive.

Edited March 9, 2015 by EvilDrSomkid