Labourers tend to steel structures at an expressway section. The land windfall tax on areas benefiting from state infrastructure projects will be finalised next month.

A draft bill on the land windfall tax is expected to go before Finance Minister Apisak Tantivorawong for approval by August and the applicable tax rate, which is flat, could be lower than the 5% ceiling, says the Fiscal Policy Office's chief.

Even though the draft bill will set the ceiling tax rate at 5%, the Finance Ministry can fix the applicable rate lower than the maximum, said Krisada Chinavicharana, director-general of the Finance Ministry's think tank.

He said the tax will not take a toll on property developers and those who reap a windfall from the inflated price from transport infrastructure development, as the rate is minimal.

Those who are liable for the tax must own land within a radius of 2.5 kilometres of stations serving high-speed, double-track or electric trains, or the on- and off-ramp from expressways.

Those who own plots 5km from building-restricted zones like airports and ports will also be required to pay the tax.

But the radius in some areas where electric train stations are concentrated could be shortened to 1km to prevent tax disputes, Mr Krisada said.

Owners of land located within the set radius from infrastructure projects that enter commercial operation before the law governing land windfall tax takes effect will be exempt from it, while those with land located within the set distance from infrastructure projects that are under construction or for which contracts have been signed before the date of the tax enforcement will be subject to the levy.

According to the Fiscal Policy Office's paper on the public hearing, landlords whose land value is inflated will be charged the land windfall tax every time ownership is transferred from the time when the transport infrastructure project's contract is signed until the project's completion.

After transport projects begin operations, those owning land for residential and agricultural purposes will not be liable to pay the tax, while those who have land for commercial use and whose land value is higher than 50 million baht will be subject to the tax upon ownership transfer.

Only property developers with a project value of more than 50 million baht will be taxed in the event that land ownership is transferred after the infrastructure project is launched.

But a one-time tax will be applied to cases in which land ownership is transferred after a transport infrastructure project starts. That means other landlords on plots for which the tax has been paid will no longer be subject to the tax.

Britain, France, Poland and Colombia have all imposed land windfall taxes.

Mr Krisada said the Finance Ministry may review some issues in the draft bill raised at recent public hearings.

Some people have proposed that a portion of revenue generated from the land windfall tax be directed to local administrative organisations, while the draft bill stated that the tax will be entirely contributed to the fund for basic transport infrastructure project development.