Broaden the taxable property supply base to increase GST revenue

I FULLY support the recommendation by professional services firm Grant Thornton of a combination of real property gains tax for residential property and a deemed rental income tax for vacant residential property ("Wealth taxes should be directed at investment properties: Grant Thornton", The Business Times, Jan 24).

Further, I would suggest broadening the taxable supply base to include residential properties other than those occupied by the owners to increase GST revenue while ensuring progressiveness and fairness. This would also supplement the property cooling measures implemented by the government from time to time, as it increases the total cost of ownership.

Under the GST Act, the sale and lease of properties in Singapore are subject to GST except for residential properties. Residential properties are designated based on the permitted use under the Planning Act, and does not differentiate between owner-occupied and non-owner-occupied residential properties.

To better align the objective of the GST exemption and ensure a progressive and fair tax system, the government should consider charging GST on all residential properties, other than those which are purchased for owner occupation. Residential properties purchased but not occupied by the owners should be subject to GST.

Currently, under the property tax system, every property owner has to declare one of his/her properties as owner-occupied in order to enjoy the concessionary property tax rate. Otherwise, a higher non-owner-occupied residential tax rate will apply. This system is fair because it does not discriminate wealthy persons buying expensive properties, so long as they are used for owner occupation.

This change can also be easily enforced from an administrative perspective. It also complements government efforts to arrest property speculation and runaway property prices.

As the government mulls over other avenues of increasing tax revenue to fund social programmes, such as capital gains tax and estate duties, I believe making subtle tweaks to the existing system can also contribute to growing the tax sources while pursuing social benefits.

Ee Teck Siew