PROPERTY TAX IN SINGAPORE: PROGRESSIVENESS OF THE REGIME ON RESIDENTIAL PROPERTIES AND ITS REVENUE POTENTIAL

Abstract

The rise of the ageing demographic in Singapore has created much concern surrounding the economic health of the nation. Coupled with slowing economic growth, the country is faced with a rising wealth inequality alongside an increasing demand for social spending on healthcare needs. This study examines how property tax can be used to reduce inequality and help raise revenue to support the rising demand for social spending in the future.

The study tests the progressiveness of a tax system by considering the percentage of a taxpayer’s income towards paying property tax. While the results seem to indicate that the property tax regime is “truly progressive”, the absence of sufficient and complete data makes it difficult to be conclusive.

The rise of the ageing demographic in Singapore has created much concern surrounding the economic health of the nation. Coupled with slowing economic growth, the country is faced with a rising wealth inequality alongside an increasing demand for social spending on healthcare needs. This study examines how property tax can be used to reduce inequality and help raise revenue to support the rising demand for social spending in the future.

The study tests the progressiveness of a tax system by considering the percentage of a taxpayer’s income towards paying property tax. While the results seem to indicate that the property tax regime is “truly progressive”, the absence of sufficient and complete data makes it difficult to be conclusive.

The study also explores the revenue potential of property tax by reassessing the annual values of HDB residential properties to current market values and enhancing the property tax structure. The results indicate that the reassessment of the annual values may not be an easy task due to the political and legal implications involved. However, the enhancement to the property tax structure may be a viable option that is worth considering as it would improve the progressiveness and increase the revenue derived from property tax.

Keywords: property tax, progressive tax system, revenue potential and residential properties