Thai opinion: Home tax would have the poorer folks weeping

[trogers]

"...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!!

Compared to the property tax rate in your country?

Property tax is always per annum

Edited March 9, 2015 by trogers

[maoro2013]

How the he'll do the properties get valued.

What about all the land with no red paper!!! As no one officially knows about this.

[Suradit69]

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

Yes, where I come from in the US property tax is not levied by the national government but, at least in theory, by local municipalities and linked to services such as refuse collection, road maintenance, schools, etc. Rates differ from one area to the next depending on general property values, but also level of services provided. Also, for tax purposes valuation are made at a fraction of current market values and need to re assessed regularly.

I have a Thai friend who lives east of Sukhumvit in Pattaya on a soi that floods whenever it rains because of inadequate and poorly designed drainage. Really the city should have sorted that out before allowing houses to be built there. They have admitted that the problem is theirs to correct, but claim they haven't the money to do anything. Asking these people to pay taxes should come with some guarantee that at least minimum municipal services are provided, but if the money is collected from the Central government will it benefit local property owners or just go into general revenue?

I suppose this will also mean land & property taxes will be imposed on condominiums and divvied up among the co-owners? Right now we have to pay the municipality for work on sanitary drainage even though the problem may be damage done outside the condo property.

[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'.

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.

That's why I say food and some other essentials should be exempt...but an increase for other items , including all services. Now, as you know, many transactions are made in cash and no tax is paid.

[mahjongguy]

"How the he'll do the properties get valued."

The Land Department has been performing assessments for some time, concentrating initially on commercial property where the tax rates will be much higher.

It is my guess that when the first tax bill goes out (two years from now?) if there has been no evaluation yet made then they will use the last purchase price until better information becomes available.

[bangkoklasse]

Greeks pay taxes?

They never pay anything. They only spend and let the rest of Europe pay their bills.........and they belive it's a normal..

[maoro2013]

What about all the land without red paper?

Who is going to value all these properties Eg farms?

Who will value the houses?

[GinBoy2]

So at present there is no infrastructure established to value, let alone implement any land/property tax, as the Govt reporting in another thread, hence the two years to set it up.

The rates that have been quoted are extremely low as others have pointed out; a 5M Baht house would only rake in 5000฿, with a 2M house bringing a paltry 1000฿ annually.

So kiddies break out your guesimating calculators to figure out whats going to be the net income from this scheme when you factor in all the addition infrastructure & administration costs?

Net Loss or Gain?? I wait with bated breath

[Commerce]

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.

How did you work that out? 500B?

if you have a calculator handy, check out 2,000,000 x 0.05. You might just recognise that it's 100,000B, and not 5,000 as you indignantly and sarcastically suggest.

Happy with that would you be, as an extra addition to your annual outgoings, no matter how rich - it's a fair sum?

So, if you do indeed own a place where you state in your case 5,000 baht a year tax might be manageable.... I guess you live in a tin-hut Khlong property then?

[razorramone]

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'.

How would a VAT increase be more progressive than a home tax?

The rate of home ownership in the urban areas of Thailand is 75%, with 25% renting.

I would consider the 25% too poor to own a home to be the 'poorer folks' of the OP.

Edited March 9, 2015 by razorramone

[Commerce]

So at present there is no infrastructure established to value, let alone implement any land/property tax, as the Govt reporting in another thread, hence the two years to set it up.

The rates that have been quoted are extremely low as others have pointed out; a 5M Baht house would only rake in 5000฿, with a 2M house bringing a paltry 1000฿ annually.

So kiddies break out your guesimating calculators to figure out whats going to be the net income from this scheme when you factor in all the addition infrastructure & administration costs?

Net Loss or Gain?? I wait with bated breath

See above!

[Dumbfounded]

2 mill less 1 mill exempt x 0.05% = 500 on my calculator

[mahjongguy]

"if you have a calculator handy, check out 2,000,000 x 0.05. You might just recognise that it's 100,000B"

You might just recognize that the posts above quoted 0.05%. Now get your calculator back out.

[bangkoklasse]

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.

How did you work that out? 500B?

if you have a calculator handy, check out 2,000,000 x 0.05. You might just recognise that it's 100,000B, and not 5,000 as you indignantly and sarcastically suggest.

Happy with that would you be, as an extra addition to your annual outgoings, no matter how rich - it's a fair sum?

So, if you do indeed own a place where you state in your case 5,000 baht a year tax might be manageable.... I guess you live in a tin-hut Khlong property then?

- first million baht excluded

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

It will not be any 100,000 baht

[konying]

Considering little birds have not paid a single baht in personal income tax , paying little to contribute would not hurt.

But then again , entire tax system needs evaluation as too many parasite of it.

[GinBoy2]

I think someone needs a little percentage math refresher:

(x/y)*100 = %, where y is the total, and x is the fraction.

so to calculate 0.05% of 2M it's, (2000000*0.05)/100 = 1000

[wabothai]

Thai opinion is not paying taxes.

[Bluespunk]

I think someone needs a little percentage math refresher:

(x/y)*100 = %, where y is the total, and x is the fraction.

so to calculate 0.05% of 2M it's, (2000000*0.05)/100 = 1000

So 500 baht for 1m. Baht property?

I think even little birds can pay that.

[maidee]

they are going a bit strong, no ?

inheritance tax, for the first in this country and in the same time house/land tax, what is next ?

unused (farm)land should be tax far greater and so are 2nd, 3rd homes

[rotary]

The road to ruin. You buy something and pay tax every year when it is only on your property. A western idea who's time has passed.

[Muhendis]

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

Yes I think you are right except that in the UK, Council Tax (rates) is paid to the local government authority who use it to pay for the police, schools, rubbish collection and repairs to minor roads (and many other smaller projects). I do not yet see anything mentioned in the proposed new tax to indicate on what it will be spent nor how it will be collected.

[Commerce]

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.

How did you work that out? 500B?

if you have a calculator handy, check out 2,000,000 x 0.05. You might just recognise that it's 100,000B, and not 5,000 as you indignantly and sarcastically suggest.

Happy with that would you be, as an extra addition to your annual outgoings, no matter how rich - it's a fair sum?

So, if you do indeed own a place where you state in your case 5,000 baht a year tax might be manageable.... I guess you live in a tin-hut Khlong property then?

- first million baht excluded

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

It will not be any 100,000 baht

Come on. I'm not thick at maths.

Even if the property is 2M, AND first million excluded.

Please tell me what 0,05 x 1M =?

I kind of get 50,000.

For 3M then it's 0.05 of 2M, after subtracting the initial 1M exemption, = 100,000.

Is it that difficult to calculate?

It isn't 1,000 or even 5,000B. Good luck to you mathematicians though.

[pedro01]

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?

Thailand is different in that our taxes line the pockets of the corrupt.

I'd prefer they increased the benefit of taxes by preventing graft first. Then I wouldnt mind paying more.

[Commerce]

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

Yes I think you are right except that in the UK, Council Tax (rates) is paid to the local government authority who use it to pay for the police, schools, rubbish collection and repairs to minor roads (and many other smaller projects). I do not yet see anything mentioned in the proposed new tax to indicate on what it will be spent nor how it will be collected.

Well observed - plus fire-engines that cost millions, fire-fighters, and local commodities that generate income from tourism for locally imported foreigners all paid for!!

[GinBoy2]

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.

How did you work that out? 500B?

if you have a calculator handy, check out 2,000,000 x 0.05. You might just recognise that it's 100,000B, and not 5,000 as you indignantly and sarcastically suggest.

Happy with that would you be, as an extra addition to your annual outgoings, no matter how rich - it's a fair sum?

So, if you do indeed own a place where you state in your case 5,000 baht a year tax might be manageable.... I guess you live in a tin-hut Khlong property then?

- first million baht excluded

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

It will not be any 100,000 baht

Come on. I'm not thick at maths.

Even if the property is 2M, AND first million excluded.

Please tell me what 0,05 x 1M =?

I kind of get 50,000.

For 3M then it's 0.05 of 2M, after subtracting the initial 1M exemption, = 100,000.

Is it that difficult to calculate?

It isn't 1,000 or even 5,000B. Good luck to you mathematicians though.

Read my post above: percentage of a total is not calculated by simply multiplying 0.005 by the total. Remember what "percent" means, it's a fraction of 100. So again look at the equation I gave above, you need to divide your total by 100, to get the "number" that is the 0.05% (PERCENT) of the total.

(X/Y)*100 = %, so transposing to calculate the value of X: X = (Y*%)/100

[Commerce]

- first million baht excluded

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

It will not be any 100,000 baht

Come on. I'm not thick at maths.

Even if the property is 2M, AND first million excluded.

Please tell me what 0,05 x 1M =?

I kind of get 50,000.

For 3M then it's 0.05 of 2M, after subtracting the initial 1M exemption, = 100,000.

Is it that difficult to calculate?

It isn't 1,000 or even 5,000B. Good luck to you mathematicians though.

Read my post above: percentage of a total is not calculated by simply multiplying 0.005 by the total. Remember what "percent" means, it's a fraction of 100. So again look at the equation I gave above, you need to divide your total by 100, to get the "number" that is the 0.05% (PERCENT) of the total.

(X/Y)*100 = %, so transposing to calculate the value of X: X = (Y*%)/100

..... You got the point. You ever seen Thai government maths?

[khunPer]

"...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%.

There seem at the moment to be some confusion about the actual percentage of taxation – or someone has been misquoting and the quote repeated in numerous media (personally I hope the last).

I read about some scaring high number the other day at Thai Visa News. Just checked my memory with Google:

Thai PBS on 5th March, and NSNBC AltThaiNews Network on 6th March both states:

»Three tax rates have been proposed: 0.5 percent for land for farming and for residential purposes but in the initial period land for residential purpose will be taxed just 0.01 percent. The proposed tax rate for land for commercial purpose is 2 percent whereas the tax ceiling of unutilised land is 4 percent.«

(Source: http://englishnews.thaipbs.or.th/finance-holds-back-land-and-house-tax-bill)

-Whilst and undated lawyers page claims:

»Taxes under the Act will be assessed on the appraised value of property and be payable annually. The rates will be established by a Tax Rate Committee but subject to the following maximum rates: 0.05% for agricultural property; 0.1% for residential property and 0.5% for “general use” property (which would include commercial property). Property used for certain public activities or for religious or charitable purposes will be exempt from taxation. Finally, the Act contemplates that the value of certain fixtures located on the property may also be subject to tax, as prescribed by ministerial regulation...

...For example, if the Tax Rate Committee decides to use 0.1% as the tax rate for residential property, then the applicable rate for residential property will be only 0.05% and 0.075% in years three and four, respectively, with the 0.1% rate fully imposed in the fifth year and thereafter.«

(Source: http://www.pricesanond.com/knowledge/proposed-amendments-to-thailands-land-and-building-tax-laws.php)

There is a huge difference on my calculator between 0.1% and 0.5% in tax for residential use.

For example, a property (land+house) worth 5 million baht – which is absolutely plausible in many residential areas in Bangkok, and at most holiday destinations where many expats lives – even with less tax of the first 3 million baht, you shall pay either 2,000 baht a year or 10,000 baht a year; and a property at value 10 million baht is not that unusual where the difference will be from 7,000 baht to 35,000 baht.

However, time will show...

[Dumbfounded]

big difference between 1 mill x 0.05 = 50,000 & 1 mill x 0.05% = 500. I Know which one I would rather pay

[Thai at Heart]

WEll, the next obvious question is, how much someone with a one million baht house pay, not whether they shouldn't pay at all.....

500 baht a year? 1000 baht a year, because certainly, someone with a 20 mn baht house, should pay something....

[Srikcir]

No one likes to pay more tax. You will find few people demanding tax increases.

But if additional revenues are necessary for the government to provide adequate services to the nation, more taxes need to be raised in whatever form. It is the responsibility of the government to disclose the planned use of such taxes so the public understands the necessity, especially when the government officials are not responsible nor accountable to the public as is the Junta-led government.

But increasing government revenues by raising income tax rates or adding new tax bases is not the only option for the government. It can:

- close tax loopholes to increase taxable income

- amend tax code to reduce tax avoidance features

- increase tax collection efficiency

- increase enforcement

- create tax reductions aimed at low income earners

Success in all of the above should generate 50-200% additional taxes without increasing any single tax rate or creating new taxable sources. Just increasing taxes is mindless and insensitive to the taxpayers at large. Thailand taxation system becomes almost feudal where the lowest income people bear the greatest burden without proportional benefits.