PROPERTY TAX (AMENDMENT) BILL

Order for Second Reading read.

3.26 p.m.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill proposes amendments to the Property Tax Act (Chapter 144 of the Revised Edition) which aim to protect revenue, rectify certain shortcomings in the Act, and streamline procedures. The main amendments deal with objections to assessment, delegation of more power to the Valuation Review Board, eliciting information for speedier assessment and tax collection, recoveries of tax arrears and remission of tax.

Clause 2 relates to section 7 of the Property Tax Act under the existing provisions of which a refund of property tax may be allowed for any unbroken period of not less than 30 days during which the building is unoccupied. The intention was to refund where the building vacancy is a month or longer but, as presently worded, section 7 precludes a refund for the calendar month of February which has only 28 or 29 days. This anomaly will be removed by the amendments proposed in clause 2 of the Bill which will permit refund of property tax on an unoccupied building provided it has been unoccupied for any unbroken period of not less than 30 days or a calendar month. The Comptroller of Property Tax will also be given the discretionary power to extend the period of 14 days within which a written notice of such vacancy has to be given to qualify for refund of property tax paid.

Clauses 3 and 11 will provide for the situation arising from the increase in recent years in the number of multi-storey commercial projects, where parts of such buildings are brought into occupational use whilst work on upper floors still remains uncompleted. To avoid delay in the assessment and collection of tax on the occupied portions, it is proposed to permit the Chief Assessor to assess separately and include in the Valuation List each part of a partially completed building as it is used or let out. Consequentially, it is also proposed that the Comptroller of Property Tax be empowered to recover tax from the date of use of such part of a building.

Clause 4 relates to the present practice in regard to an assessment under objection or appeal, which is to issue a notice of assessment for every ensuing year so long as the objection remains outstanding. This creates unnecessary work and, more often than not, confuses taxpayers as to whether their original objection would cover the assessment for the subsequent years. The amendment suggested in clause 4 will obviate the necessity of having to issue notices of assessment for ensuing years, unless it is intended to vary the original assessment. It is proposed that once an objection is determined, the decision thereof shall be made applicable to each year from the first assessment or reassessment.

Clauses 5, 10, 12 and 17 deal with the situation under the Act at present, where owners of new properties do not have to pay tax when they object to the assessments of the Chief Assessor until a decision is reached by the Valuation Review Board. Some owners, therefore, resort to objections in order to delay payments. It is now proposed to require an owner to pay tax on the assessment of the Chief Assessor notwithstanding any appeal lodged; adjustments will be made as soon as the appeal against the assessment is resolved. For example, if the Chief Assessor assesses a new property at an annual value of $10,000 and the owner claims it to be $5,000 the tax will be collected, in the first instance, on the assessment of $10,000. Subsequently, if the Valuation Review Board determines the assessment at (say) $8,000, the overpayment of tax will be refunded forthwith, and the Board will be empowered to award at its discretion interest at 6 per cent per annum. If in the opinion of the Board an appeal is frivolous or vexatious, it may order an appellant to pay costs to the Board. The proposed amendments will discourage objections and appeals made to defer payment of tax and will relieve valuers from work on such appeals for more productive work.

Where arrears of property tax are sought to be collected under section 19 of the Property Tax Act, disputes may arise and such questions are, at present, resolved by proceedings initiated by either party in the High Court. It is proposed by clauses 12, 15, 16 and 17 to empower the Valuation Review Board to hear and decide on disputed cases of back-collection of property tax. This will expedite the resolution of these disputes as well as the collection of tax arrears.

Section 14 of the Act empowers the Chief Assessor to elicit information from the owner, lessee and occupier of any property for preparing or correcting the Valuation List. The amendment of this section, proposed in clause 7, will enable the Chief Assessor to obtain such particulars as may be required from other relevant sources, such as architects, developers, contractors and management corporations. By the new section 19 proposed in clause 11, the Comptroller of Property Tax is given similar powers but for the purpose of determining the tax payable. These proposals, it is hoped, will expedite assessment and reassessment of properties and collection of tax.

Under section 16 of the Act, an owner who has not received a notice calling on him to pay within six months from 1st January, 1961, is required to notify the Chief Assessor within 14 days after the expiration of that period. The amendment proposed in clause 8 will require the owner to give notice of his charge-ability to tax, if he has not received a notice calling on him to pay tax in respect of his property within six months from the 1st day of January of each year.

Section 17 (8) of the Act prescribes that whenever the rent of any property which is let is increased, the owner of such property shall give notice thereof to the Chief Assessor. However, some owners of properties do not report increase in the rentals on the pretext that the whole of the increase is attributable to furniture, fittings, service charges or maintenance fees, etc. In cases where an owner is in receipt of a premium paid by the tenant as a condition for the tenancy, and where an owner obtains planning permission for development or subdivision of land, there is presently no obligation to inform, the Chief Assessor. Accordingly, the amendment in clause 9 seeks to impose a clear obligation on the owners to inform the Chief Assessor as and when each such situation arises so that the Valuation List may be amended where appropriate. All these situations invariably give rise to an increased assessment.

The new subsection to section 34 proposed in clause 19 provides that if any tax is not paid within the prescribed period, the Comptroller may in his discretion add thereto a sum not exceeding five per cent of the amount of the tax payable. Clause 20 introduces another section which allows payments of the tax by instalments with interest which shall not exceed ten per cent per annum. Clause 21 of the Bill seeks by an amendment to section 35 to give explicit powers to the Comptroller to execute the conveyance on properties sold pursuant to section 35 of the Act. It will not affect the application of section 123 of the Land Titles Act in relation to registered land. Without this amendment, the power to execute the conveyance of properties sold pursuant to section 35 has to be implied from the application of the provisions of sections 35 and 38 of the Act. The power under this amendment is also to apply to conveyances executed before the commencement of the Property Tax (Amendment) Act, 1973, as it is necessary to remove any possible doubt whatsoever as to the regularity or validity of the execution of past conveyances.

Clause 22 amends section 59 of the Act to provide for maximum penalty for an offence under this Act, or any regulation made thereunder for which no penalty is expressly provided, to be increased from $500 to $1,000. Clause 23 introduces a new section to the Act by which the Comptroller may compound any offence under this Act by accepting the payment of a sum of money, and no further proceedings shall be taken against the person for the offence committed by him. There are at present no provisions in the Act for remission of property tax on the ground of poverty, or where it is just or equitable to do so. Under the provisions of the new section 59A, the Minister will be empowered to remit wholly or in part the tax payable by any person on the ground of poverty, or if he is satisfied that it is just and equitable to do so.

The other amendments in the Bill are either consequential or are designed to tidy up procedural matters.

Sir, I beg to move.

Question proposed.

3.38 p.m.

Mr N. Govindasamy (Telok Blangah): Mr Speaker, Sir, I have only one comment to make on the Bill to amend the Property Tax Act, and that is, to welcome the token of compassion and generosity by the Minister in introducing clause 23 of the Bill, which proposes a new section 59B to the principal Act, whereby the Minister may grant property tax remission on the ground of poverty or if he is satisfied that it is just and equitable to do so.

At first sight I thought it must have been a drafting error, as it seems patently ridiculous that any owner of real estate property in Singapore can justifiably apply for tax exemption or remission on the ground of poverty or any other equitable ground. But, on further consideration, the proposed provision turns out to meet a very real need. One situation I have in mind is that of a worker who has exhausted his CPF contributions by paying the initial instalment for his flat and eventually dies without fully paying for his flat and leaving perhaps a sum of money against his insurance policy, which sum may just be able to pay off the balance of instalments on the flat. It is conceivable that in such a situation, the widow as owner of the flat, and if she is not working, may have to ask for remission of estate duty until such time as she can make arrangements for alternative accommodation and selling off the flat. I do not know if the Minister has some other situation in mind.

However, Sir, at the last sitting of this House on 11th July, a Question was asked as to whether the Minister could, in view of the greatly inflated prices of real estate property in Singapore, grant exemption or remission from estate duty in respect of a family whose sole breadwinner has died. The reply given by the Minister was that it would be difficult to draw a distinction between houses owned and occupied by such a family and a palatial mansion owned and occupied by the heirs of a wealthy deceased. In that respect, the introduction of the proposed section 59B into the Property Tax Act is heartening, as it seems to indicate that the Minister has second thoughts about the plight of a family of a deceased wage earner. If the principle underlying such a provision can be extended to the payment of estate duty by the family of a deceased, who was the sole principal wage earner and who left no sizable assets other than the house or flat occupied by the family, either by way of an outright remission of estate duty for so long as the house or flat is not sold by way of a deferment of tax for a stipulated number of years or until such time as the family could sell off the house or flat without being desperate, then the proposed section 59B could be rightly regarded as an example of equitable legislation.

3.44 p.m.

Mr Hwang Soo Jin (Jalan Kayu): Mr Speaker, Sir, clause 8 of the Bill requires a property owner to notify the Inland Revenue of his liability to pay tax if he has not received a notice calling on him to pay tax in respect of his property within six months from the 1st January of each year. Failure to do so is an offence and the offender may be punished with a fine not exceeding $1,000.

Sir, in the implementation of this particular provision, I do hope that the department concerned will be flexible and reasonable in dealing with noncompliance by rural folks. I have in mind those people who at present enjoy concessionary rates at $6 per annum, as their houses are of timber and/or attap material. Perhaps on account of the very small sum involved, it has not been the practice of the department to send out notices to owners of such structures. Consequently, I have come across many cases where houseowners have not paid their taxes for many years, because at each visit to the department to inquire they are told to wait for notices to be sent to them. In most cases, of course, the notices never seem to arrive. Sir, these people are mainly working class people and they have very little time, apart from their own personal affairs, to look into the numerous items of taxes, fees, etc, which they have to pay in the course of any one year. It is therefore inevitable that such items could be overlooked. Take an average farmer in a rural area. He has the following items to pay:

(1) Temporary Occupation Licence fee to the Land Office.

(2) Property tax to the Inland Revenue.

(3) Farmer's licence fee to the Primary Production Department. There are several types of licences depending on the scope and nature of his operations.

(4) Radio and TV licence fee.

(5) PUB bills.

(6) Motor vehicle licence fee, if he happens to own a truck or a motorcycle.

(7) Hawker's licence fee, if he happens to sell his own produce.

(8) Telephone bill. Of course, not every one can afford a telephone, but an increasing number of people are installing telephones in their homes to avail themselves of such modern means of communication.

Furthermore as he does not normally have a bank account, the payment of each of these items can involve considerable inconvenience and time, which is precious to him.

I would therefore take this opportunity of enquiring from the Minister whether he would consider setting up a central collection agency which will be charged with the responsibility of collecting all types of fees and taxes receivable by Government departments and statutory bodies. If this can be introduced, I feel sure that it will benefit not only the rural folks but the majority of our population.

Mr Hon Sui Sen: Sir, I do not have very much to add to what I have said. The Member for Telok Blangah has said that the Minister was compasssionate with regard to property tax but not estate duty. I would only like to remind him that there is already a limit of $25,000 within which poverty-stricken people would not have to pay estate duty. But it was for an extension of this generosity that the suggestion was made. In the case of property tax, it may be that an attap hut owner, as the Member for Jalan Kayu says, has to pay $6 a year and he may not even be able to pay that. We may be concerned with those cases when perhaps the Minister can exercise his compassion of which he has some supply, if not very much.

The Member for Jalan Kayu also touched on the problem of non-compliance with notification to the Comptroller. If a notice for payment has not been received by the owner within six months, and if he does not report that he is chargeable to tax, that constitutes an offence. Again, we would have regard to the circumstances of the case, and if it is found that there is deliberate evasion of property tax, then the full force of this particular section in the Property Tax Act will be made to apply. Otherwise, at least in the initial stages, we will view with some consideration any non-compliance with the Act.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. -[Mr Hon Sui Sen].

Bill considered in Committee; reported without amendment; read a Third time and passed.