ANNUAL VALUES OF PROPERTY (Rationale for upward revision)

Mr Goh Chong Chia asked the Minister for Finance if he will explain the rationale for the Inland Revenue Authority of Singapore revising the annual values of property upwards at this point in time despite the fact that there has been a general decline in property values.

Mr Goh Chong Chia: Mr Speaker, in asking Question No. 8, I wish to declare that I have received a similar letter from IRAS.

Dr Richard Hu Tsu Tau: Sir, the annual value of a property is derived from the market rental value of the property taking into account the state and physical condition of the property at the time of review. The annual values of some properties may not move in tandem with the general movement in property values. For example, the property might have undergone some improvements or there could be an improvement in rents due to local factors or due to policy or law changes such as the abolition of rent control, therefore affecting the rental value of that property, which will then be reflected in upward revision of the annual value.

In FY98 and FY99, the percentage of the total stock of properties that had a downward revision in annual values was 21% and 7% respectively. A total of 2% have their annual values reviewed upwards in FY98 and FY99. For FY2000, about 4% of the total stock of properties have had an upward revision in their annual values. Most were due to additions and alterations to the properties, therefore enhancing their rental values. 1% had a downward revision and 95% had experienced no change to their annual values.

For owners who are dissatisfied with their annual value revisions, there is an appeals process, where those who disagree with the revaluations proposed by the Chief Assessor can submit their cases, and the appeals can finally go to a Valuation Review Board. The Valuation Review Board is an independent tribunal established to adjudicate disputes between taxpayers and the Inland Revenue Authority. It comprises members with no connection with IRAS and who are professionals in the field.

Mr Goh Chong Chia: Mr Speaker, Sir, the property we are discussing has nothing to do with upgrading or rent control. In fact, the properties are similar.

Mr Speaker: Ask your question, Mr Goh.

Mr Goh Chong Chia: I do not understand the rationale for the upward revision of the annual values of the properties.

Dr Richard Hu Tsu Tau: Is the Member referring to a particular property?

Mr Goh Chong Chia: No. One of the properties is mine, but they are on a whole row, and they are existing buildings. There is no upgrading.

Dr Richard Hu Tsu Tau: I think the Member has to file a separate question. I do not know the identity of that particular property. I have to inquire into the valuations of that particular row of properties affected.