The finance minister is currently weighing recommendations, which include tax breaks to encourage buying of homes, the adviser said.

The private sector has been crying out for government action to boost the dormant residential-property sector and halt an economic slide at the same time.

Another source said the announcement was waiting only for an assessment of the impact of tax cuts on government revenue.

Government Housing Bank president Khan Prachuabmoh, an adviser to Finance Minister Chalongphob Sussangkarn, said the minister was in possession of property-market stimulus recommendations.

However, home-buyers' main concern is interest rates. Tax measures are a supplementary stimulus, he said.

He declined to detail the tax proposals.

A source said there was a good chance the government would slash the specific business tax to one-hundredth of 1 per cent from the current 3.3 per cent.

The indirect tax was introduced in 1992 and is applied to businesses excluded from value-added tax such as real estate, banking, life insurance and pawnbrokers.

Mortgage-registration fees paid by buyers could fall to the same level from the current 1 per cent.

The ministry is unlikely to cut property-transaction fees, which is income for local administrations, a source said.

Home-owner tax exemptions are likely to be increased from Bt50,000 to Bt70,000 a year.

The government is considering other tax measures to boost domestic consumption.

The exemption limit for personal-income tax exemptions might be raised from the current Bt60,000 a year to Bt90,000, while exemptions for school-age children might also be raised from Bt17,000 a year currently and from Bt15,000 a year for pre-schoolers.

The source said domestic-consumption stimulus measures might be introduced after the property tax measures.

Meanwhile, property companies have asked the government to make an unambiguous statement of its intentions soon because buyers had put purchases on hold after "unclear messages from the government last month".

Prueksa Real Estate chief executive and managing director Thongma Vijitpongpun said cuts to specific business tax, mortgage tax and transfer fees would be positive.

"If the government reduces special taxes, property companies can reduce operation costs. We believe almost all companies will cut house prices by an average of 5 per cent to 6 per cent.

"This will help the market through the tough times," Thongma said.

Property Perfect senior executive officer Dr Teerachon Manomaiphibul said tax incentives would speed up purchase decisions, and urged the government to make an announcement soon.

But the panacea for home-buyers is cheaper mortgages, he said.

If lending rates are cut by 1 per cent purchasing power will increase 8 per cent, and that will see more loan approvals from banks, he said.

Cuts to business and mortgage taxes and transfer fees mean fewer operating costs for developers. The knock-on effect for house prices would be a reduction of between 6 per cent and 7 per cent, he added.

About 5,300 residential-property transactions were recorded in the first two months of this year - down 5 per cent on the same period last year.

Somluck Srimalee,

Wichit Chaitrong

The Nation