Housing taxes:
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The reason why HDB flats are over priced yet under sized.
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Housing taxes and the statement
PAP: ‘To understand the full extent of public-housing subsidy for new HDB flats, one should be comparing the market value of the flats with the sale prices charged by HDB, rather than look at the input costs of land and building. ’- http://forums.delphiforums.com/n/mb/message.asp?webtag=sammyboymod&msg=129387.1
It is my observation that housing taxes in SG are rather out date.
They benefit mainly the rich… and the gov has overlooked the issue of ‘land costs’.
At present: all owner occupied residential properties (prop) attract a flat tax rate of 4% p.a. of the annual value (rental cost p.a. of a similar property)
All ‘owner non-occupied’ (ie vacant/ rented out) properties attract at flat tax rate of 10% of the annual value.
http://www.iras.gov.sg/ESVPortal/pt/pt_d.1.d.6_what+are+the+claims+available+for+residential+properties.asp
This causes a distortion in our society.
1) Land is a limited resource in SG: all citizens have birth right to affordable land (through equitable distribution by the gov).
2) A manipulation by the rich inevitably deprives the poor of their birth right.
3) A moral gov shouldnÂ’t perpetuate such unscrupulous maneuvers.
4) A moral gov has the duty of maintaining the harmony of our society.
5) Already the rich have it easy as the gov seemingly protects their riches from tax: property up to S$9M is exempt from the usual estate tax (i.e. 5-10%): http://www.iras.gov.sg/ESVPortal/others/estate/index.asp . a brief calc will reveal estate duty exemption of between $450- 900K had the deceased simply invested in SG property, beats me why the SG gov has overlooked this massive source of tax revenue. WouldnÂ’t such means of hording wealth also artificially increase land prices and deprive other citizens of necessary living space?
The distortions I have observed:
1) Unlike the progressive taxes that COEs, road taxes, income, stamp duties attract, etc, housing is a sore exception.
2) Any necessity in horded in excess is a luxury, especially if it inadvertently increases the costs of land in land scarce Singapore.
3) Admittedly 10% (non- owner occupied rate) may slightly improve the rental mkt bc owners rent out in the attempt to offset taxes; however: does this tax really effectively curb speculation? How many speculative investors are there who mis-declare their more valuable properties as ‘owner-occupied’- yet rent them out to yield greater profits?
4) How much speculation should be allowed on a limited resource that has gives stability to families, the building block of our nation?
5) Have HDB apartments become undersized and over priced?
6) Should HDB be the only provider of housing in Singapore?
7) Indeed, the current housing tax system is an outdated expression of ‘progression’- an inadequate system that is badly in need of a re-look. Any delays would only serve to distort the rental market more- ultimately resulting in greater costs to SG society.
Changes I expect to see in housing tax laws:
1) A progressive rate should be charged: eg 3% for the 1st $10K annual value, 6% on the next 10K, 10% on the next 10K, 15% the next and 20% for whatever in excess of $40K value (mirrors LTA road tax/ income tax calc schedules: http://www.iras.gov.sg/ESVPortal/iit/iit-se-a1.1.15+tax+rates+for+resident+individuals.asp ).
2) Tax houses based on individual value and do away with the category of ‘Non-owner occupied’, because if U think big, then ‘Non-owner occupied’ is a lesser evil then those who sit on hordes of land with the intent of ‘investment’.
Benefits I expect from a revamp of the housing tax system:
1) Gov will have to lessen its strong hold on our society: lessen its grip as a manipulator of society towards becoming a moral guide to society.
2) More houses will be built when rich sell land in view of the increased tax such excess attract.
3) Housing sizes and options will increase: allowing families to have more kids: reversing the current dearth of babies.
4) Mosquito breeding in disused bungalows will decrease> it is more likely for large bungalows to be well up kept under the new system of taxes as only the truly rich and capable would be able to pay the increased taxes, and fewer disused houses will exist as speculation becomes less popular.
5) Rentals of apartments will stabilize as more units are built- giving both locals and foreigners more housing options: this would surely boost our economy.
6) GST increase may be delayed with a further tweaking of our housing tax system.
7) Govt will take a more moral approach of government instead of a paternalistic approach: something that would help PAP with its dwindling popularity.
Property (like the army) is a necessary infrastructure for progress: there is nothing wrong with owning more then 1, just as long as by doing so, you donÂ’t deprive others of their rights: (this is achievable by renting out your spare properties at a reasonable rate).
Related Problems:
1. Rich are given scholarships: http://sg.news.yahoo.com/061217/3/45ih4.html
2. ST140107: “82,000 residents under the HDB’s public rental scheme”- so many people cannot afford to rent open market and are at the mercy of the HDB… why?
Please inform me of any omissions/ errors;
Due to lack of energy/ resources, this draft carries no guarantee on the accuracy of information herein stated.
And yes… the Emperor is still wearing his ‘new clothes’ but don’t laugh at least not out loud…. U might get caught. -
Your ideas are good however there is a point I have to disagree on. I doubt they will listen to you tho .Originally posted by bic_cherry:Housing taxes:
Changes I expect to see in housing tax laws:
1) A progressive rate should be charged: eg 3% for the 1st $10K annual value, 6% on the next 10K, 10% on the next 10K, 15% the next and 20% for whatever in excess of $40K value (mirrors LTA road tax/ income tax calc schedules: http://www.iras.gov.sg/ESVPortal/iit/iit-se-a1.1.15+tax+rates+for+resident+individuals.asp ).
2) Tax houses based on individual value and do away with the category of ‘Non-owner occupied’
First of all tax individuals based on property value - if they want more tax money , it is easier to artificially inflate the property value and then tax like crazy off people who want to have bigger flats to house a family.
There are people who are living in 3 bed room flats whom are actually richer than those who live in bigger flats.
Why not put it in this way - tax the value and allow owners to offset mortgage interest against the taxes? Throw in full tax and extra land tax for those who own bungalows or semi detached , or (full tax only) condominiums instead of providing concessionary amounts. -
is there anything that does not favour the rich?
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Hi fymk
" if they want more tax money , it is easier to artificially inflate the property value and then tax like crazy off people who want to have bigger flats to house a family. "
then stay in 2 small flats, else: force gov to reveal their scales for calc prop tax... -
That defeats the purpose. Those who cannot afford it will often stay in one flat as big as they can get it. Those who can afford 2 flats and mind you there are people who stay in 3 bedroom flats who are damn rich , and they get past the system.Originally posted by bic_cherry:Hi fymk
" if they want more tax money , it is easier to artificially inflate the property value and then tax like crazy off people who want to have bigger flats to house a family. "
then stay in 2 small flats, else: force gov to reveal their scales for calc prop tax...
Let me tell you what is fair.
In Australia, my property is non taxable because I placed an owner occupier status on it since my sister lives in it. In Singapore , they tax you on your property? 4%?
I am all for HDB occupier ownership to have concession rates if the government finds it hard to cut off the 4% but the only fair thing for those struggling is to offset their interest against the tax itself and it should be restricted to only those who have 1 property.
I am also all for taking off concession rates for landed and private property owners - because most of them are rich. I am all for additional land tax on landed property owners. I am all for taxing the full rate off those who have more than 1 property. Will it happen? I doubt that because alot of important elitist people stay in those properties.
You want fair? Force the government to reveal their scales? Singaporeans already have problems asking them to account for actual land value as well as HDB value ( go look at linyu's post on transparency) and you want them to reveal their scales? You are making me laugh.
Life is never fair . -
Just nice. Something I was drawing eariler in the evening.
edited: Sorry. Can't link from blogspot.
The image is at this link below:
http://parkablogs.blogspot.com/2007/01/nations-best-kept-secret.html -
I'm thinking hard....Originally posted by dragg:is there anything that does not favour the rich?
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Nope. -
I think Singapore is the only country (correct me if I am wrong) that imputes an annual value to the property, even though the owner is residing in it. If you don't have rental income they still insist that you pay a tax on your property. Does this make sense? It's equivalent to you keeping your money (without interest income) at home and they asking for a payment of tax. US, UK and HK don't have these kind of tax appropriation.
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1.) I don't see a strong correlation between housing and your issue of strong manipulator and moral guide of society.Originally posted by bic_cherry:Benefits I expect from a revamp of the housing tax system:
1) Gov will have to lessen its strong hold on our society: lessen its grip as a manipulator of society towards becoming a moral guide to society.
2) More houses will be built when rich sell land in view of the increased tax such excess attract.
3) Housing sizes and options will increase: allowing families to have more kids: reversing the current dearth of babies.
4) Mosquito breeding in disused bungalows will decrease> it is more likely for large bungalows to be well up kept under the new system of taxes as only the truly rich and capable would be able to pay the increased taxes, and fewer disused houses will exist as speculation becomes less popular.
5) Rentals of apartments will stabilize as more units are built- giving both locals and foreigners more housing options: this would surely boost our economy.
6) GST increase may be delayed with a further tweaking of our housing tax system.
7) Govt will take a more moral approach of government instead of a paternalistic approach: something that would help PAP with its dwindling popularity. Property (like the army) is a necessary infrastructure for progress: there is nothing wrong with owning more then 1, just as long as by doing so, you donÂ’t deprive others of their rights: (this is achievable by renting out your spare properties at a reasonable rate).
2.) In such a scenario, the risk of constructing buildings will be too high, not many developers will want to invest, they might end up constructing a building with no buyers and end up paying heavy taxes; they might shift investments elsewhere, leading to less developers leading to oligopolistic or monopolistic developers who might charge price of properties at supernormal profits. The idea is to reduce tax, not to increase it, taxes in any form is bad, even GST.
The cost of buildings is related to the tendering system that the gov imposes, you get developers trying to outbid each other with higher prices, such prices are passed on to the final home buyer. At the end of the day, the gov has a bigger pocket and the home buyer bears the brunt of the cost.
What is the cost of the land to the gov? Virtually nothing (unless you are talking about reclaimed land, which they sold to private developers at hefty profits), so the actual price of public housing should be cost of construction (includes salaries of admin staff at HDB), nothing else.
What right have they got to inflate prices of flats to astronomical value? Every Singaporean deserves a right to cheap public housing.
3.) Housing sizes and options will increase? Explain? The decrease in newborns is related to the economic progress, I don't think housing plays a significant part in it.
4.) Don't understand your logic in linking mosquitoes with taxes.
5.) Don't understand your logic of more rental apartments being built too. You said increase the taxes, tax is a cost to owners of these apartments; do you know the true course of taxes; anything you tax more, the spending in that area will decrease. You want the consumption of something to increase with taxes? Never heard of such a thing in economics, unless it's a Giffen good, which till date, I have no idea what commodity can be considered a Giffen good.
6.) No GST is better, I'd rather the gov look at ways of reducing their own cost, like reducing the number of members of parliament to 50 and reducing their salaries.
7.) These days morals aren't worth anything, you can't eat morals, you can't drink morals, you can't wear morals, you can't dwell in morals, what matters most is $$$, the more the merrier.
8.) Don't understand what you are trying to say here. -
The great sg gov calls it as opportunity rental tax which is based on the 4% of the expected annual rental collection.Originally posted by maurizio13:I think Singapore is the only country (correct me if I am wrong) that imputes an annual value to the property, even though the owner is residing in it. If you don't have rental income they still insist that you pay a tax on your property. Does this make sense? It's equivalent to you keeping your money (without interest income) at home and they asking for a payment of tax. US, UK and HK don't have these kind of tax appropriation.
We had been charged S$2000 property tax per year for our occupied home,but r wondering wat is this tax about as u had mentioned in the above-mentioned posting.
Anyone here knows the rational of this creative property tax???? -
If they could charge you a tax for breathing air, they would.
Really.