Expected to come into force in 2017, the bill sets the tax-ceiling rates at 0.2 per cent of the appraisal value for land used for agriculture purposes, 0.5 per cent for residences, 2 per cent for commercial uses and 5 per cent for undeveloped land.

The land and building tax is designed to expand the national tax bases, especially asset-based taxation, in a bid to reduce inequality and improve land distribution and increase the use of land nationwide.

The tax would be levied only on homes and land used for agriculture, with the appraisal price starting from Bt50 million, and they would be taxed on the amount exceeding that figure.

The tax would cost payers around Bt1,000 per Bt1 million over Bt50 million.

For real estate companies, land banks awaiting development would be exempt from the tax for the first three to four years.

Somchai said only 1 per cent of farmers would have to pay the tax as most owned on average 30 rai (4.8 hectares) of land each worth only Bt1 million on average.

The tax charged on residences would be progressive, so homes appraised at Bt60 million would be taxed at a higher rate than those valued at Bt50 million. Common areas in all housing projects would be exempt from the tax.

Issara Boonyoung, Business Housing Association adviser and chief executive of Kanda Group, said 90 per cent of homeowners would be unaffected by the latest version of Land and Building Tax Act. The tax’s focus was the rich, he said.

Impact on homeowners

And he said the impact of the tax on homeowners would be lessened by the maximum tax rate being 0.5 per cent.

“This will be better for undeveloped land nationwide because this Act will force land owners to develop their land or sell it,” he said. “If they still hold onto the land, they will have to shoulder the tax cost.

“This [the Act] is also better for land developers, who will have more choice to develop land in the future.”