Thai opinion: Home tax would have the poorer folks weeping

[Stradavarius37]

100 percent behind this tax - if both the Democrats AND PTP hate it then is MUST Be a good thing for Thailand.

Anything the sh#t eating politicians don't like - I support 100 percent!

[theguyfromanotherforum]

Your economy 101 does not apply to Thailand at all. You bet rents will go up.

[natway09]

Maybe increase VAT to 10%. The more wealthy you are the more you spend & as a consequence pay more, correct ?

[trogers]

Maybe increase VAT to 10%. The more wealthy you are the more you spend & as a consequence pay more, correct ?

VAT is a general tax paid by all who consumes. The poor would pay more taxes (proportional to their income) because they would spend almost all their income on consumption.

The rich pays less tax because they do not spend all their income, and would probably save a large chunk of it.

[manarak]

Both VAT and land/house taxes are taxes that would put pressure on the poorer part of the population.

VAT is easy to see: low to middle incomes spend most of their disposable income on consumption, while affluent persons spend only a fraction, meanig VAT impacts poor people much more than the rich.

I do believe a "luxury VAT rate" on some select products and services does make sense, such as new passenger/sports cars that for example cost over 1 million, motorcycles over 250cc, imported alcohols, imported cosmetics, imported clothing, some imported foods, fine dining restaurants, etc.

House and real estate taxes are not advisable because here too, the tax would hit middle class directly and the poor indirectly by raising rental costs and indirectly the cost of products and services and also impact the cost of living of the poor, which has to be avoided at all costs to keep a functioning society.

In general, I also consider the concept of "private property" to be very valuable and a high priority - any tax on property equals paying rent on the property which is counter-intuitive and infringes on property rights.

In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich. If society becomes more mass-consumption oriented and grants too many consumer loans, the interest goes to the rich.

Many taxes and restrictive laws impact small business more than large ones, because large businesses just raise the prices while small businesses have to face competition.

Most tax raises in the Western world have increased the income and wealth gap between rich and poor, it's time to counter that.

But income and wealth tax measures aren't the solution for redistributing wealth. Already the word "redistribution" contains the idea of taking (stealing) something that was rightfully earned by someone to give it to someone else whose merit is uncertain.

I would rather want to make sure everyone has a fair shot at doing business and owning property, making it easier for small and medium businesses and more difficult for large corporations.

In personal tax matters, I would rather advocate making an all-including income and wealth tax, where one tax compensates the other to avoid double taxation, i.e. already paid income tax would be compounded with any due wealth tax.

Explanation on how it would work:

Implement an income tax that includes all revenue from work/salaries, trade profits, business, interests received, etc. and tax it progressively but moderately, for example zero until 180k of yearly income, five percent until 350k, ten percent until 500k, fifteen until 1000k, and twenty until 5000k, twenty five beyond.

Then implement a wealth tax on everything a person owns: real estate, cars, companies, stocks, etc.

Make it moderate too: zero tax until 5 million, 0.25% until 10 million, 0.50% until 25 million, 0.75% until 50 million and 1% beyond.

And make the two taxes compounded, i.e. a person only pays the higher of both amounts.

For example, if a person earns 1 million a year (pays 150.000 income tax) and owns wealth for 8 million (20.000 wealth tax due), then the person would only pay the 150.000 income tax but no wealth tax.

If a person still earns 1 million a year but owns 60 million in wealth, the person would own 600.000 in wealth tax, so that person would pay 150.000 income tax plus 450.000 wealth tax.

This mechanism makes sure that while all people get taxed appropriately, no people get over-taxed for both wealth and income.

Of course, the rates above are just examples and may need adjustment.

I would apply this to companies as well !

[trogers]

"In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich."

Has the name of the property owner changed in such a structure shift? No consequence to tax collection. Whoever is named owner in the title deed pays the tax.

This is why the rich cannot use a poor man as proxy to hold large chunk of land to evade land tax.

[manarak]

"In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich."

Has the name of the property owner changed in such a structure shift? No consequence to tax collection. Whoever is named owner in the title deed pays the tax.

This is why the rich cannot use a poor man as proxy to hold large chunk of land to evade land tax.

Ownership structure changes over time in favor of corporations, investment funds.

Some of the poor folks lose their property to pay for debt, but mostly the shift is made towards new rentals, i.e. apartment/condo buildings are not built by individuals.

The more people are housed in rentals, the more their dependency on a salary rises, as does their cost of living.

[trogers]

"In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich."

Has the name of the property owner changed in such a structure shift? No consequence to tax collection. Whoever is named owner in the title deed pays the tax.

This is why the rich cannot use a poor man as proxy to hold large chunk of land to evade land tax.

Ownership structure changes over time in favor of corporations, investment funds.

Some of the poor folks lose their property to pay for debt, but mostly the shift is made towards new rentals, i.e. apartment/condo buildings are not built by individuals.

The more people are housed in rentals, the more their dependency on a salary rises, as does their cost of living.

How do poor folks get to own the properties in the first place? Why did they get into debts?

[sirineou]

I understand the need of a country for revenue

but why should some one pay tax an their house? not only in Thailand but anywhere

if they need revenue the only thing they should tax in my opinion , is income

there are three things that IMO are basic human needs for survival and should not be taxed

Food that we eat

The air that we breath

and shelter

extravagant shelter could be taxed as a luxury but 1M to 3m is not extravagant it is at best adequate

[cmsally]

"In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich."

Has the name of the property owner changed in such a structure shift? No consequence to tax collection. Whoever is named owner in the title deed pays the tax.

This is why the rich cannot use a poor man as proxy to hold large chunk of land to evade land tax.

Ownership structure changes over time in favor of corporations, investment funds.

Some of the poor folks lose their property to pay for debt, but mostly the shift is made towards new rentals, i.e. apartment/condo buildings are not built by individuals.

The more people are housed in rentals, the more their dependency on a salary rises, as does their cost of living.

I think that is pretty correct. A case of ruling elite + big business with state apparatus thrown into the mix.

[huanga]

Alternative:

VAT increase would have all folks weeping.

[manarak]

"In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich."

Has the name of the property owner changed in such a structure shift? No consequence to tax collection. Whoever is named owner in the title deed pays the tax.

This is why the rich cannot use a poor man as proxy to hold large chunk of land to evade land tax.

Ownership structure changes over time in favor of corporations, investment funds.

Some of the poor folks lose their property to pay for debt, but mostly the shift is made towards new rentals, i.e. apartment/condo buildings are not built by individuals.

The more people are housed in rentals, the more their dependency on a salary rises, as does their cost of living.

How do poor folks get to own the properties in the first place? Why did they get into debts?

Mostly through inheritance.

The cause of debt is not really relevant, but the interest rate is.

I do think debt is too cheap and tricks people into thinking they can sustain the payments.

Another of my proposals would be to floor interest at 5%, make it a legal minimum for any debt.

Another problem of the Western property market is that it gets flooded by huge sums of money, coming on one side from mortgages but also on the other side from financial markets, i.e. investment funds looking for a profitable way to invest money.

This pushes property prices up and also rental costs (because funds need to see a yield), and is a barrier to property ownership of middle class earners.

[trogers]

"In general, what we see in the Western world is that such taxes help the rich to tilt the gameboard in such a way that income goes their way, for example if property structure shifts from freehold to rental, it benefits the rich."

Has the name of the property owner changed in such a structure shift? No consequence to tax collection. Whoever is named owner in the title deed pays the tax.

This is why the rich cannot use a poor man as proxy to hold large chunk of land to evade land tax.

Ownership structure changes over time in favor of corporations, investment funds.

Some of the poor folks lose their property to pay for debt, but mostly the shift is made towards new rentals, i.e. apartment/condo buildings are not built by individuals.

The more people are housed in rentals, the more their dependency on a salary rises, as does their cost of living.

How do poor folks get to own the properties in the first place? Why did they get into debts?

Mostly through inheritance.

The cause of debt is not really relevant, but the interest rate is.

I do think debt is too cheap and tricks people into thinking they can sustain the payments.

Another of my proposals would be to floor interest at 5%, make it a legal minimum for any debt.

Another problem of the Western property market is that it gets flooded by huge sums of money, coming on one side from mortgages but also on the other side from financial markets, i.e. investment funds looking for a profitable way to invest money.

This pushes property prices up and also rental costs (because funds need to see a yield), and is a barrier to property ownership of middle class earners.

I do not see rental cost as something an owner can simply raise in an open market. I have to look at the market every few years to consider holding or raising my asking rents.

In fact, I had to drop my asking rent 3% after just 7 months to get a tenant in Singapore. My previous tenant on a 6-month lease had just left.

[manarak]

Mostly through inheritance.

The cause of debt is not really relevant, but the interest rate is.

I do think debt is too cheap and tricks people into thinking they can sustain the payments.

Another of my proposals would be to floor interest at 5%, make it a legal minimum for any debt.

Another problem of the Western property market is that it gets flooded by huge sums of money, coming on one side from mortgages but also on the other side from financial markets, i.e. investment funds looking for a profitable way to invest money.

This pushes property prices up and also rental costs (because funds need to see a yield), and is a barrier to property ownership of middle class earners.

I do not see rental cost as something an owner can simply raise in an open market. I have to look at the market every few years to consider holding or raising my asking rents.

In fact, I had to drop my asking rent 3% after just 7 months to get a tenant in Singapore. My previous tenant on a 6-month lease had just left.

Taxes, a wave of investment money or low mortgage rates are structural/systemic (okay, rates can also be considered conjunctural, but I consider them to be a consequence of the government's money policy) and have long-lasting effects on a market, it's mostly not something that changes things a lot over 6 months or a year, but the effects unfold over longer periods (10 years+) and move the whole market into a direction.

If you held property for a longer time, I suppose you already witnessed such systemic effects, but maybe weren't able to relate them to their root cause.

Edited March 12, 2015 by manarak

[trogers]

Mostly through inheritance.

The cause of debt is not really relevant, but the interest rate is.

I do think debt is too cheap and tricks people into thinking they can sustain the payments.

Another of my proposals would be to floor interest at 5%, make it a legal minimum for any debt.

Another problem of the Western property market is that it gets flooded by huge sums of money, coming on one side from mortgages but also on the other side from financial markets, i.e. investment funds looking for a profitable way to invest money.

This pushes property prices up and also rental costs (because funds need to see a yield), and is a barrier to property ownership of middle class earners.

I do not see rental cost as something an owner can simply raise in an open market. I have to look at the market every few years to consider holding or raising my asking rents.

In fact, I had to drop my asking rent 3% after just 7 months to get a tenant in Singapore. My previous tenant on a 6-month lease had just left.

Taxes, a wave of investment money or low mortgage rates are structural/systemic (okay, rates can also be considered conjunctural, but I consider them to be a consequence of the government's money policy) and have long-lasting effects on a market, it's mostly not something that changes things a lot over 6 months or a year, but the effects unfold over longer periods (10 years+) and move the whole market into a direction.

If you held property for a longer time, I suppose you already witnessed such systemic effects, but maybe weren't able to relate them to their root cause.

High volume of cheap and easy money usually creates speculative bubbles (price inflation). Investment fundamentals are often thrown out the window. This can happen within 4-5 years and not a decade.

Singapore is addressing this problem by making money not easy to borrow. They already have a property tax system based on annual value.

Thailand has yet to address this issue. And there is not much pain for developers or buyers to leave properties idle.

My hope is that this Land Tax would start to bring in some pain.

Edited March 12, 2015 by trogers

[manarak]

Mostly through inheritance.

The cause of debt is not really relevant, but the interest rate is.

I do think debt is too cheap and tricks people into thinking they can sustain the payments.

Another of my proposals would be to floor interest at 5%, make it a legal minimum for any debt.

Another problem of the Western property market is that it gets flooded by huge sums of money, coming on one side from mortgages but also on the other side from financial markets, i.e. investment funds looking for a profitable way to invest money.

This pushes property prices up and also rental costs (because funds need to see a yield), and is a barrier to property ownership of middle class earners.

I do not see rental cost as something an owner can simply raise in an open market. I have to look at the market every few years to consider holding or raising my asking rents.

In fact, I had to drop my asking rent 3% after just 7 months to get a tenant in Singapore. My previous tenant on a 6-month lease had just left.

Taxes, a wave of investment money or low mortgage rates are structural/systemic (okay, rates can also be considered conjunctural, but I consider them to be a consequence of the government's money policy) and have long-lasting effects on a market, it's mostly not something that changes things a lot over 6 months or a year, but the effects unfold over longer periods (10 years+) and move the whole market into a direction.

If you held property for a longer time, I suppose you already witnessed such systemic effects, but maybe weren't able to relate them to their root cause.

High volume of cheap and easy money usually creates speculative bubbles (price inflation). Investment fundamentals are often thrown out the window. This can happen within 4-5 years and not a decade.

Singapore is addressing this problem by making money not easy to borrow. They already have a property tax system based on annual value.

Thailand has yet to address this issue. And there is not much pain for developers or buyers to leave properties idle.

My hope is that this Land Tax would start to bring in some pain.

Why do you want to bring in pain when there is no shortage of accomodation?

[trogers]

Mostly through inheritance.

The cause of debt is not really relevant, but the interest rate is.

I do think debt is too cheap and tricks people into thinking they can sustain the payments.

Another of my proposals would be to floor interest at 5%, make it a legal minimum for any debt.

Another problem of the Western property market is that it gets flooded by huge sums of money, coming on one side from mortgages but also on the other side from financial markets, i.e. investment funds looking for a profitable way to invest money.

This pushes property prices up and also rental costs (because funds need to see a yield), and is a barrier to property ownership of middle class earners.

I do not see rental cost as something an owner can simply raise in an open market. I have to look at the market every few years to consider holding or raising my asking rents.

In fact, I had to drop my asking rent 3% after just 7 months to get a tenant in Singapore. My previous tenant on a 6-month lease had just left.

Taxes, a wave of investment money or low mortgage rates are structural/systemic (okay, rates can also be considered conjunctural, but I consider them to be a consequence of the government's money policy) and have long-lasting effects on a market, it's mostly not something that changes things a lot over 6 months or a year, but the effects unfold over longer periods (10 years+) and move the whole market into a direction.

If you held property for a longer time, I suppose you already witnessed such systemic effects, but maybe weren't able to relate them to their root cause.

High volume of cheap and easy money usually creates speculative bubbles (price inflation). Investment fundamentals are often thrown out the window. This can happen within 4-5 years and not a decade.

Singapore is addressing this problem by making money not easy to borrow. They already have a property tax system based on annual value.

Thailand has yet to address this issue. And there is not much pain for developers or buyers to leave properties idle.

My hope is that this Land Tax would start to bring in some pain.

Why do you want to bring in pain when there is no shortage of accomodation?

Efficiency in the allocation of resources (see ghost cities of China).

Address the issue of speculators leaving properties vacant and common fees unpaid. The same goes for developers with unsold units.

[manarak]

Why do you want to bring in pain when there is no shortage of accomodation?

Efficiency in the allocation of resources (see ghost cities of China).

Address the issue of speculators leaving properties vacant and common fees unpaid. The same goes for developers with unsold units.

Vacant units are usually the result of both a failure of government in its policy or of the government messing with market mechanisms.

Developers don't build units for the fun of it.

Adding tax feels a bit like punishing workers and investors for the failure of the government.

[trogers]

Why do you want to bring in pain when there is no shortage of accomodation?

Efficiency in the allocation of resources (see ghost cities of China).

Address the issue of speculators leaving properties vacant and common fees unpaid. The same goes for developers with unsold units.

Vacant units are usually the result of both a failure of government in its policy or of the government messing with market mechanisms.

Developers don't build units for the fun of it.

Adding tax feels a bit like punishing workers and investors for the failure of the government.

? ever wonder why developers start new projects when completed ones still have so many unsold units? Probably not for fun, but should they stop building, how would management justify continued employment?

[manarak]

Why do you want to bring in pain when there is no shortage of accomodation?

Efficiency in the allocation of resources (see ghost cities of China).

Address the issue of speculators leaving properties vacant and common fees unpaid. The same goes for developers with unsold units.

Vacant units are usually the result of both a failure of government in its policy or of the government messing with market mechanisms.

Developers don't build units for the fun of it.

Adding tax feels a bit like punishing workers and investors for the failure of the government.

? ever wonder why developers start new projects when completed ones still have so many unsold units? Probably not for fun, but should they stop building, how would management justify continued employment?

There certainly are reasons for this.

So... which market are you talking about at which moment in time?

[trogers]

Why do you want to bring in pain when there is no shortage of accomodation?

Efficiency in the allocation of resources (see ghost cities of China).

Address the issue of speculators leaving properties vacant and common fees unpaid. The same goes for developers with unsold units.

Vacant units are usually the result of both a failure of government in its policy or of the government messing with market mechanisms.

Developers don't build units for the fun of it.

Adding tax feels a bit like punishing workers and investors for the failure of the government.

? ever wonder why developers start new projects when completed ones still have so many unsold units? Probably not for fun, but should they stop building, how would management justify continued employment?

There certainly are reasons for this.

So... which market are you talking about at which moment in time?

I only buy into old condos during downturns. But not in projects with problems collecting common fees.

[HOAX]

As long as these tax payments goes back to it`s citizens and used wisely, then I don`t have a problem with it.

It would be like saying socialism has been bad for Norway if I didn`t like the idea. In fact, it could potentially be a goldmine for future Thailand, and be very beneficial for everyone in Thailand, at leased in sight. It of course all depends on how much taxes they`re asking for versus income, how much debt people are in, how well organized, structured and executed it is, how it will be given in return and corruption. You don`t want to make the poor, poorer. But it`s absolutely possible to take taxes to build up a nation`s infrastructure, improving education standards, free education, improving health care services, free health care, higher pensions, improving overall quality living, and boost economy throughout in return back to its citizens. It will have some consequences though, like the tourism industry, housing market, increased prices and a potentially increased unemployment rate, but it`s well worth it in my opinion.

But as everyone here most likely already have noticed, Thais are not exactly famous for being patient, planning careers and using their money wisely. It usually goes the other way, when school is done, get a random job, borrow money to buy a 700,000 baht brand new pickup, get a baby, and then in many cases (nowadays) a house, instead of focusing on their careers, putting education into use, perhaps study further, build your way up through a company, start your own project, and when you`ve built up a steady platform, then buy a new expensive car and a house. It`s easy to see where and why it`s so much debt among young Thais today, and it will be painful if not nothing gets done about it soon.

Edited March 13, 2015 by HOAX