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Jul 3, 2010
Surprised by sharp tax hike on owner-occupied homes
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I RECEIVED a notice from the taxman last week informing me of a hefty 10 per cent hike in my property tax.
While the recent property price increases may reflect buoyancy or 'bubble' of market demand, I am sure the euphoria has no effect on me because my family and I have to reside in our property.
A check with my neighbours revealed that most of the rental units had contracts locked in until 2012 and beyond.
While they are prepared to defray the increases from rental incomes, I have to bear the full increase.
The hefty increase is not right for owner-occupiers at a time when the prospect of good times is still questionable.
Traditionally, property tax was reviewed and reassessed long after the value and rental yield of surrounding areas had realised actual incremental benefits over two to three years.
The increases were usually incremental.
In short, a hike in property tax usually trailed stable market conditions.
The Inland Revenue Authority of Singapore collects incremental taxes via stamp duty on property sales and income tax from higher rental yield.
The low valuation and absence of the goods and services tax did not disrupt and burden owner-occupied properties as keenly in the past.
But the high cost of living during the last decade has greatly affected the low- and middle-income groups.
The move by the Chief Assessor to collect property tax based on buoyant market trends, and in advance, does not appear to be fair compared with the previous practice.
Thursday's report ('Bonus dips, total pay shrinks but...') that bonuses dipped and total pay shrank, plus recent price increases in things such as insurance premiums, electricity tariffs and petrol pump prices, adds to the wisdom of holding back on hefty hikes by the taxman.
Paul Chan
