Land tax could spur the economy

BANGKOK: A respected economist has backed a proposal that the government impose a land tax, saying the move will ease concentration of land ownership in the hands of a few rich people and open more land to agriculture.

Speaking at a round table conducted by Krungthep Thurakij  newspaper last week, economist Duangmanee Laovakul said the faculty’s Economic Research and Training Center had calculated the move would generate between 43.39 billion and 2.6 trillion baht per year, depending on the tax rate used.

The proposal was a good one because it would become a tool with which the government could distribute land away from landlords toward other sectors of the economy, said Ms Duangmanee, vice-dean of the Thammasat University’s Faculty of Economics.

For instance, research has discovered that one landowner in Bangkok holds land totaling more than 2,036 rai.

Ms Duangmanee said that if the government announced a land tax and effectively collected the tax, it would increase the cost of holding land and could become a tool for easing the concentration of land in just a few hands.

If the government succeeds in taxing 100% of the total land value, it will collect between 86.78 billion and t2.6 trillion baht, depending on a tax rate from 0.01% to 0.3%, she said.

If the government taxes only 50% of all land value, it will collect between 43.39 billion and 1.3 trillion baht using the same range of tax rates.

“Although it will be difficult to launch land tax laws, this tax will promote fairness and prevent the rich from dominating land-resource use,” she said.

Boon Jung, a representative of a Bantad mountain community in Trang, said his community supported the government in launching land tax legislation because it would help farmers to gain more land for their crops. At present, most land across the country is owned by landlords who hardly use it, he said.

If the government introduces a land tax, this will increase the cost of holding land and could force landlords to make proper use of their land – or sell it to reduce their tax burden.

Here in Phuket, the reception for a land tax is likely to be somewhat less enthusiastic than that of Ms Duangmanee and Mr Boon because of the damage it would do to the island’s property industry and, quite possibly, tourism, the latter often requirng large tracts of land for creation of tourist attractions such as resorts, horseback riding stables, golf courses, sports and other recreational facilities for children, etc.

— Nation & Phuket Gazette Reporters