ST Forum : Wrong to base property tax on land size

18 Feb 2011,
Wrong to base property tax on land size

MR GOH Ching Soon pointed out that landed property should be taxed according to the land area that the property occupied ("Make property tax more equitable"; Wednesday).

He gave an example of a bungalow that sits on a 10,000 sq m plot of land versus 40 three-room flats in the same plot area and concluded that the 40 three-room flat dwellers collectively pay a higher amount of tax than a landed property dweller.

However, properties are taxed based on their annual value, which is the estimated amount of rental they would fetch if they were to be rented out. How much rental a property can command depends on many factors, and size is just one of them.

A check on some property websites indicates that the estimated rental for bungalows of land areas up to 10,000 sq m is in the region of $30,000. The median rents of a three-room HDB flat in the fourth quarter of last year was $1,700, which means 40 flats would fetch $68,000 collectively in rental.

Clearly, it is not equitable to peg property tax according to land size.

Tan Yong Sang