How Far From The Train Station Should We Tax? An Empirical Study Based On Value Capture Method

Abstract

This research aims to present a way to earn income for the government through the expansion of the property tax base. It basically collects tax from the asset owners that benefit from the increased value in the development of public infrastructure. There are two important objectives: First, the author wants to analyze the economic impact that occurs from the presence of the train station and other relating factors on the value of housing. Second, the author desires to apply the value capture method to create a tax model. The sample group is 511 residential buildings located within a radius of 2 km. along the road from the nearest MRT Blue Line station. The tools employed in this research are: (1) Hedonic Pricing Model, used to evaluate the relationships of various variables on the value of assets, and (2) Spatial Econometrics, used to solve spatial autocorrelation problem and increase the accuracy of estimates.

The study finds that only residential property located within a distance of 0-400 meters from the train station, is influenced through an increase in property price. The price is higher if a station is interchange station or junction connecting more than one line. Whilst, being easy to access public spaces and the strictness of enforcing Environmental Impact Assessment (EIA) Law result in a higher in real estate price as well. Finally, according to the tax model, if the government carries out progressive tax forms, the country’s subsidies for infrastructure construction will be increased by approximately 34.63-173.15 million baht.