SINGAPORE: Despite the housing market slump, property taxes collected by the Inland Revenue Authority of Singapore (Iras) rose 2.7 per cent in FY2015/2016, due mainly to higher receipts from the private residential, industrial and commercial segments.
Total property taxes collected for FY2015/2016 amounted to S$4.5 billion. Taxes from the private residential sector rose to S$853.2 million from S$837.9 million a year earlier, as a result of the increase in units in both the landed and non-landed segments, including executive condominiums, even as the median annual value of the properties fell.
“Property tax collection depends on the property market, so when the rental market goes down there will be lower collection overall. But in this instance, the increase is due mainly to more units, the completions of more units that pushed the total taxes higher. In a poor market situation, many units are vacant but owners of vacant units also have to pay property taxes and are not exempted,” said Mr Leung Yew Kwong, principal tax consultant at KPMG. By the end of the financial year in March 2016, private home prices had fallen for 10 straight quarters, and they extended the drop in the quarter ended June to take the cumulative decline since the peak in 2013 to 9.4 per cent.
UOB economist Francis Tan said: “The higher taxes collected comes from the volume side. The higher transaction volume supercedes the price drop. People are not delaying such big ticket purchases, reflecting that we are not in a recessionary mode. The economy is slowing but there is still demand even at a slower pace.” Taxes collected from private industrial property rose to S$1.27 billion from S$1.14 billion a year earlier, while those collected from the private commercial segment rose to S$1.47 billion from S$1.45 billion.
For the HDB segment, property taxes collected fell to S$134.3 million from S$140.3 million despite an increase in units, Iras data showed, as the median annual value for the properties decreased to S$10,080 from S$10,440.
“There is a reduction in annual value at least for the HDB due to the market decline in residential rents. Also, HDB properties tend to be at the lower end in pricing with lower tax rates, so the increase in tax is marginal compared to higher-end properties where its annual value tend to graduate faster,” Mr Leung saidAngela Teng.
