THAILAND

The government's land and building tax bill needs to do more to solve social inequality, activists say.

Surapon Songrak, a Surat Thani representative of the Land Reform Network of Thailand, said yesterday the bill could do more to prevent land grabs by large agricultural companies.

It should impose higher tax rates on big farms to prevent agricultural concerns from buying up land cheaply, he told a seminar on the land tax and justice of land tenure.

The bill provides for large-scale farmers to pay the same rates of land tax as small-scale farmers, which was unfair, he said.

The cabinet approved the land and building tax bill in April. It goes before the state's legal arm, the Council of State, for scrutiny next month.

Jaroonsri Chyehard, the Fiscal Policy Office's director of local tax and non-tax revenue policy, said the bill allowed local administration organisations to better manage land under their jurisdiction.

It also encouraged landlords to make use of vacant land to spur the economy.

The country has about 321 million rai of idle land nationwide. About 10 million farmers rent their land and 5 million have no land to call their own.

Ms Jaroonsri said local administration organisations would be able to raise 20billion baht a year from the land tax.

The bill sets ceilings on tax rates for three types of land: farmland (not over 0.05%), residential land (not over 0.1%), and others, including commercial shop houses and unused land (not over 0.5%).

Unused land that lies idle for more than three years would be subject to double the tax rate.

The rates would be revised every four years by the land tax committee, chaired by the finance permanent secretary.

Ms Jaroonsri said a public hearing would be held.

Temples, crown property and land held by the poor would be exempt.

"I call on all sides to wholeheartedly support the bill," she said.

"We are just climbing the first step of the ladder which will take us to a higher place."

Duangmanee Laovakul, assistant professor of economics at Thammasat University, said the bill was a basic fiscal tool.

"The tax rate is not progressive but, when combined with other measures such as community land deeds and the creation of a land bank fund, we should have something to move on," Ms Duangmanee said.

Phasuk Pongpaijit, economics professor at Chulalongkorn University, said proponents of the bill felt it would reduce social inequalities and disperse land ownership. Ms Phasuk said the government should overhaul taxation if it really wanted to address socio-economic inequalities.