Extra Bt50-bn budget tabled

News

The Finance Ministry will today propose a Bt50-billion mid-year budget to the Cabinet for use in enhancing national competitiveness in line with the government’s plans.

However, critics are concerned that the government will use the additional funds for political purposes such as financing its small, medium and large (SML) populist policy, under which funds are allocated directly to villages and communities.

The Finance Ministry is confident that its tax revenue will exceed its earlier Bt1.2-trillion target by Bt50 billion. It said the government would maintain fiscal balance for the current fiscal year ending in September.

Meanwhile, a tax expert yesterday said he was in favour of the Finance Ministry’s plan to bring in new tax ratings on land and property. “New tax rates should be lower and based on the market price of property,” said Medhi Krongkaew, professor of economics at the National Institute of Development Administration.

Deputy Finance Minister Varathep Rattanakorn said earlier that the Finance Ministry would propose new tax rates on land and buildings to the Cabinet after a new government had been established.

The ministry proposes to collect annually up to 0.1 per cent of the value of properties used for residential and agricultural purposes, and up to 0.3 per cent for commercial and industrial properties. The ratings are to be appraised by the Treasury Department.

The new tax will replace the current 12.5-per-cent tax, which may seem high but is only imposed on a small tax base, said Medhi, who specialises in taxation issues.

Tax rates should be lower but the tax base should be wider, he added.

“Tax experts have long been pushing for tax changes and we hope this time they will be passed into law,” said Medhi.

Tax changes failed to reach Parliament during the Chuan administration and failed again during the Thaksin government’s first term, largely due to a disagreement on the appropriate level. Varathep warned that high rates imposed on land and property owners would force them to leave their land undeveloped.

A ministry study showed that despite being lower than the current rate, the new tax regime would increase income for local government.

The Bangkok Metropolitan Administration is expected to have additional income of about Bt6 billion, while that of municipalities and Pattaya City will rise by about Bt8.5 billion.

Tambon Administrative Orga-nisations will get about Bt32.3 billion.

Tax revenue is expected to rise if the 0.3-per-cent rate is imposed on property used for commercial development.

Published on March 01, 2005

Wichit Chaitrong

The Nation

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