Thursday, March 14, 2013

Tharman reassures retirees about property tax

The Straits Times - March 8, 2013
MOST retirees will not face higher property taxes even if they are living in high-end landed homes, assured Deputy Prime Minister Tharman Shanmugaratnam yesterday.

MOST retirees will not face higher property taxes even if they are living in high-end landed homes, assured Deputy Prime Minister Tharman Shanmugaratnam yesterday.

He explained that the Government even took pains to study geographically where older Singaporeans are living, to make sure that those areas "were properly taken care of".

"We looked at Serangoon Gardens, we looked at Opera Estate, we looked at Teachers Estate," he said as he rounded up three days of debate on the Budget.

"And I can tell you that at least 90 per cent of even the semi-detached properties in these older estates will not face higher property tax rates as a result of this move."

Workers' Party chairman Sylvia Lim (Aljunied GRC) had asked for more clarity on how the higher taxes would not affect most retirees.

The revised property tax schedule in the Budget - intended as a wealth tax - will see a higher property tax for the top 1 per cent of owner-occupied homes, or about 12,000 homes with an annual value above $59,000.

The remaining 99 per cent, or 950,000 owner-occupied homes, will pay less property tax.

The $59,000 annual value mark, in fact, covers 96 per cent of terrace houses and 85 per cent of semi-detached properties, Mr Tharman said.

So while a high-end property, such as a landed home in the central area with an annual value of $150,000, will see an increase in property tax of $5,120 a year, a home of $70,000 annual value will see an increase of only $120 in property tax.

While that may still be a meaningful sum for a retiree, he said that retirees in high-value homes typically have other forms of passive income including interest, dividends and rental. He argued it was right to tax the wealthy more, even if they were retirees.

"Fundamentally, this is a matter of equity. It is the right principle that a wealthy retiree should pay more tax than someone who is less well-off," he said.

"Particularly since we're raising tax rates for investment properties, it will be inequitable not to tax the wealthiest or those who live in owner-occupied homes."

He also said that Ms Lim's suggestion to tax based on the total value of properties owned, rather than on a per property basis, was not a bad idea in principle, but would be difficult to implement.

This is because properties might be held under the names of different family members or relatives, and it would also be difficult to administer when properties are jointly owned by multiple owners, he said.

For more news and analysis on Singapore Budget 2013, click here for ST's Big Story coverage.

*****************Background Story *****************

I have previously asked that we consider the imposition of a "junk food tax" on sweet, sugary and high fat junk foods and beverages, but by the same token we can make healthy foods like fresh fruits and vegetables cheaper through targeted subsidies.

– Dr Chia Shi-Lu (Tanjong Pagar GRC), on nudging Singaporeans to take greater ownership of their health

Could we draw a few lessons from the 'Teach for America' programme in the United States? Its call for aspiring leaders to help disadvantaged kids close the achievement gap resonated with many bright students and individuals across America.

– Ms Low Yen Ling (Chua Chu Kang GRC), on ways to attract more people to become early childhood teachers

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