HDB RESIDENTIAL PROPERTIES (Increase in annual values and property tax)

Mr Chiam See Tong asked the Minister for Finance why the annual values of Housing and Development Board residential properties are increased over five times from their current annual values with effect from 1st July 1990; and whether the rate of property tax on these properties will eventually increase to 23% of their annual values.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, the annual value of a property is the estimated annual rental it could fetch if it is offered for rental. The existing annual values of HDB flats in the Valuation List were last determined many years ago. Since the market rentals of HDB flats have increased substantially over the years, their annual values in the Valuation List must also be increased, in accordance with the requirements of the Property Tax Act.

Notwithstanding the new annual values which came into effect on 1st July 1990, HDB flat owners should have no reason for concern. From 1st July this year, all owner-occupied residential properties would be taxed at a concessionary rate of 4% of the annual values. As a result, the actual tax payable by HDB flat owners will, in almost all cases, not exceed the amount they are currently paying.

The Government's policy is to lower the tax burden of individuals and businesses whenever our financial position allows. In line with this policy, the general rate of property tax was reduced from 36% to 23% over the period from 1979 to 1983 and was further cut to 16% from 1st July this year.

Mr Chiam See Tong: The Minister has not answered the second limb of the question,ie, whether the rate of property tax on these properties will eventually increase to 23% of their annual values.

Dr Richard Hu Tsu Tau: Sir, I cannot speak for future Finance Ministers but this present Finance Minister would not do so.