Cabinet approves tax cut for first-time homebuyers, salary guarantees for new graduates

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BANGKOK, Sept 20 – The Cabinet on Tuesday agreed to cut taxes to support first-time home buyers to enable them to have their own homes, and to provide a guaranteed salary for new graduates as promised during this year’s election campaign.

A tax reduction at a maximum 10 per cent for property prices will be applied to people buying a flat or a home costing five million baht of less, said Deputy Finance Minister Boonsong Teriyapirom.

The tax cut will be applied in the same amount each year for five consecutive years in the calculation of personal income taxes.

Buyers can exercise their right in the year following the transfer of ownership. However, ownership transfer must be completed within Sept 21, 2011 to Dec 31, 2012.

Persons entitled to benefit from the tax measures must not now own any property which served as their residence before and must hold the ownership of the new first home for the five succeeding years beginning with the date of ownership registration.

The Revenue Department will later declare the criteria, methods and conditions, the minister said.

The measures are aimed at assisting low-income earners who have never owned their own home. It is part of the government’s ‘urgent’ policies to raise the people’s quality of life, Mr Boonsong said.

The government did not implement a zero interest rate policy given that many commercial banks have had a zero per cent interest plan on offer for two years, and the government should let the private sector compete among themselves, he explained.

Revenue Department Director-General Sathit Rangkasiri said the tax reduction policy for first time buyers will favour people whose monthly salary is over 20,000 baht and entitled to pay taxes.

Only new houses included in the criteria will help stimulate real estate businesses and the government will earn more revenue from value added tax and corporate income tax.

The tax cut will reduce the government’s revenue collection by about 1.7 billion baht but it will boost real estate businesses, said Mr Sathit.

In addition, the cabinet endorsed the increase of starting salary plus allowances for civil servants with bachelor’s degree graduates to 15,000 baht to take effect in Jan 2012 and increase of salary plus allowances to 9,000 baht per month for government employees, said government spokeswoman Anuttama Amornwiwat.

More than 640,000 government employees will benefit from the measures.