Thai hotels urge reform of unfair land and building tax rates

Hotels are calling for a revision of the property tax calculation based on land appraisal prices and business income to address the uneven recovery within the hospitality industry.

President of the Thai Hotels Association (THA) Thienprasit Chaiyapatranun highlighted that the land and building tax remains a significant challenge for hotel operators. This year, the full rate is set to be collected, following a 15% discount in 2023 and a 90% reduction during the pandemic.

The existing rate, calculated based on land appraisal prices, is deemed unfair by Thienprasit. He noted that many hotels are unable to achieve pre-pandemic revenue levels or have yet to fully resume operations despite facing higher fixed costs.

He states that the rationale behind the land tax is to maximise land usage by encouraging landlords to utilise vacant plots to avoid a high tax levy.

However, he points out that this scheme is not feasible for hotels, as small and large hotels in the same location pay the same rate, though their earnings vary greatly.

Thienprasit then focuses on illegal hotels and their tax avoidance practices, meanwhile, licenced hotels continue to pay a higher tax amount, urging the government to adopt a hybrid model that considers earnings alongside the land appraisal price.

THA board advisor La-iad Bungsrithong mentioned that hotels in Chiang Mai face a greater burden compared to prime tourism provinces like Bangkok and Phuket due to the slower recovery, combined with the land tax collection and the 400-baht minimum wage.

Despite the land appraisal price in Chiang Mai being lower than in Bangkok, operators continue to struggle with revenue management due to factors such as unrecovered air traffic, slow bookings during the low season, and negative tourism sentiment caused by PM2.5 smog, all of which restrict tourism income.

The plan to increase the minimum wage to 400 baht nationwide will further escalate hotel operation costs by 14 to 15%, as hotel operators will need to raise salaries across all job positions for fair practice, said La-iad.

“Employers would need time to adjust their employment structure and adopt technology or train staff to work in multiple roles. If most hotels cannot cope with rising costs, more layoffs will be seen in the future.”

She acknowledged that elevating workers’ quality of life is a commendable initiative but urged the government to assist by lowering other expenses, such as energy prices, reported Bangkok Post.