An aerial view of Bangkok along Vibhavadi Rangsit Road. The second reading of the land and buildings tax bill is expected to take a few months. PATTANAPONG HIRUNARD

The land and buildings tax exemption for first homes valued at up to 50 million baht is the lawmakers' main topic of debate during the second reading of a draft bill on the long-awaited property tax. The reading, taking place at the moment, is expected to consume a few months.

Some members of the National Legislative Assembly (NLA) committee vetting the bill believe the 50-million-baht ceiling for the tax exemption is too much and should be lowered. Others, however, think the waiver is unfair because those who own more than one residence are subject to the tax even if their homes' combined value is less than the 50-million-baht threshold, said Wisudhi Srisuphan, head of the committee.

Mr Wisudhi refused to speculate on whether the amount would remain unchanged.

If the ceiling is raised from 50 million baht for first homes, the number of people paying the tax will decline, he said. Only a handful of first-home owners are taxed under the current tax structure proposed by the Finance Ministry.

Those who own more than one home and operators who use land for industrial and commercial purposes are expected to be the largest payers of the new property tax, Mr Wisudhi said.

He recently said first-home and farmland owners who will be exempt from the tax accounted for 90% of total land owners.

The draft bill on the land and buildings tax already passed the lawmakers' first reading. The Finance Ministry has planned for the new tax to be enforced next year.

The tax to be levied on first homes and land used for agricultural purposes will start at appraisal prices of 50 million baht. A rate of 0.05% will be applied to first homes worth between 50 million baht and 100 million, while it is 0.1% for homes worth more than 100 million.

The tax to be imposed on vacant land will increase by 0.5 percentage points every three years until it is capped at 5%. For commercial and industrial use, the tax will be imposed at 0.3% for land value below 20 million baht, and 1.5% of land value starting from 3 billion baht.

The new property tax, which will replace the outdated house and land tax and the local development tax, is aimed at narrowing income disparity, expanding the national taxpayer base, increasing tax income for local administrations and improving land use across the country.

Mr Wisudhi expects lawmakers to spend two or three months vetting the bill on the second reading if the issues are not debated too much.

He suggested that those who own more than one residence and do not want to pay the tax can transfer property to their heirs.

The new property tax can stem understated income by those who own land for commercial and industrial use, as the tax bills will be charged based on appraisal prices instead of rental income, or occupancy and room rates for hotel and serviced apartment operators.

The Finance Ministry estimates that the land and buildings tax will generate 64.2 billion baht for local administrative organisations' coffers, up from the 25.9 billion contributed by the house and land tax and the local development tax.

The ministry's survey also found only 8,556 residences and farmsteads, representing 0.04% of total homes and farmland, valued at more than 50 million baht.