HDB rentals up 10%, but property tax up 118%?

I refer to the report “Property tax rebate for most HDB flat owners” (Channel NewsAsia, Nov 27).

One-off rebate?

It states that “For a majority of other HDB flat types, the property tax bill for 2013 will increase by between S$40 and $50, after taking into account a new S$40 rebate.”

Why increase taxes?

Why do governments increase taxes?

Well, most governments increase taxes to balance the Budget, or because there is a need to spend more which may result in a deficit.

According to the article “Singapore tax revenue up despite economic slowdown” (Straits Times, Oct 31), “It has been a difficult period for the economy, but tax revenue continues to rise.

The Government’s operating revenue rose to $26.7 billion for the first six months of the year, beating the $25.5 billion collected in the same period last year.”

So, why is there a need to raise property taxes when overall tax revenue is up?

Since the Budget surplus was $2.3 billion last year and the net Budget surplus over the last six years was about $8.2 billion, why is there a need to increase property taxes now?

HDB owners benefit from rental increase?

Since 94 per cent of HDB flat-owners are owner-occupiers, how do they benefit from an increase in rentals, which is the reason given for raising property taxes?

So, what is the rationale for increasing property taxes for owner-occupied HDB flats?

Imputed rental?

Whenever inflation is high, like the 4 per cent now, Singaporeans have invariably been told that much of the inflation is due to imputed rental, and thus most Singaporeans are not as much affected by inflation because they own their homes.

So, Singapore has a CPI less imputed rentals on owner-occupied accommodation (CPI-ex OOA) which is now at 3.3 per cent.

Wait a minute – is it not somewhat self-contradictory and illogical to tell us that most of us are not as much affected by inflation because we own our homes, and yet we all have to pay more property taxes even though we don’t get any “increased rentals” from our HDB flats?

Just reduce the increase?

With regard to the government will give a one-off rebate of S$40 to owner-occupied HDB flats”, why not just reduce the property tax increase by $40, instead of increasing the property tax by as much as $91 and then give a one-off rebate of $40?

The problem with one-off rebates, is that after the “one-off”, you have to pay the full increase in the future.

It may be akin to a sleight of hand that gives the perception that the increase is not as bad as it actually is.

Do other countries do this?

Another example of this “one-off” is tranport vouchers for the needy. Whenever transport fares increase, the needy can apply for transport vouchers. But they are typically only enough to cover just that one years’s increase! In so doing, how are we helping the needy for all the years of fare increases?

We should not just accept as a matter of course all these “one-off rebates” to help us, like the Service and Conservancy Charges (S & CC) rebate, U-Save (utility) rebate, etc. We may need to scrutinise how much exactly are the increases?

118% increase?

The lowest annual property tax payable in 2012 (after rebate) for a 4-room flat was $77. This wil increase to $128 (after the $40 owner-occupied HDB rebate) in 2013.

This is an increase of 66 percent in one year, after the last increase just a year ago on 1 January, 2012.

Since the last revision of AVs of all HDB flats on 1 January 2012, market rentals of HDB flats have risen by 8% to 13%. Accordingly, the AVs of all HDB flats will be revised from 1 January 2013”, why is the increase at 66 per cent?

In 2014, after the $40 one-off rebate, the property tax for the above example would be $168.

This means an increase of 118 per cent from 2012’s $77 (after rebate).

Isn’t this a very huge increase, which may be way above the increase in market rentals?
Similarly, the highest annual property tax payable in 2012 (after rebate) for a 3-room flat was $41. This will increase to $132 (no more rebate) in 2014, which is an increase of 222 per cent.

Why do we all just accept property tax increases in such a manner as a matter of course without much of a whimper?

When was the last time that there was a debate in Parliament on the relentless rise in property taxes in apparently multiple tandem with rising property rentals?

(Note: I wrote this article in the evening of 27 November. When I woke up the next morning, the title of the news report had been changed fromProperty tax rebate for most HDB flat owners” to “Increase in property tax for HDB 3-room flats and above”)

Leong Sze Hian

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.