Property tax should not be conflated with wealth tax

I READ with great interest Leslie Yee’s commentary “Don’t spare asset-rich, cash-poor private homeowners from paying higher property taxes” (BT, Jan 13), but I must respectfully disagree with his opinion.

I present below my argument against targeting retired, asset-rich but cash-poor property owners with higher property taxes as a form of wealth tax:

• Limited financial means: Retired property owners often have no regular income and limited savings, making it difficult to pay higher property taxes. Imposing such a tax disproportionately burdens those who are asset-rich but cash-poor, forcing them to deplete their savings or compromise their basic needs.
• Historical context of ownership: Many retirees acquired their high-value properties decades ago when property prices were significantly lower. The value appreciation is often due to market forces rather than personal wealth accumulation. Penalising them for this increase in value is inequitable.
• Inheritance considerations: Properties may have been inherited, not purchased, meaning retirees may not have had any role in the property’s market value. Taxing such individuals based on inherited wealth risks overlooking their financial reality.
• Challenges of relocation: Selling and relocating to a lower-value property is not a viable option for many retirees. Navigating the real estate market is complex, and retirees may lack the expertise or physical ability to manage such transactions. Health conditions can further exacerbate this difficulty.
• Family cohesion and stability: High-value properties often serve as family homes, allowing retirees to live with their children and grandchildren. Forcing them to downsize disrupts familial bonds and diminishes the stability and comfort they seek during old age.
• Intergenerational legacy: Retirees often wish to leave their properties to their descendants as part of their legacy. Higher property taxes erode this ability, creating financial pressures that undermine their intentions.
• Sentimental value: Properties often hold immense sentimental value, tied to memories and family history. Such emotional attachment cannot be quantified or replaced, making it unjust to compel retirees to part with these properties due to financial pressures.
• Property tax versus wealth tax: Property taxes are an asset-based levy and should not be conflated with wealth taxes. A true wealth tax should be based on income or liquid assets, ensuring that individuals have the means to pay it without undue hardship.
• Alternative redistribution methods: More equitable methods exist to foster an inclusive society, such as progressive income taxes, corporate taxes, and targeted social programmes. Over-reliance on property taxes risks alienating vulnerable populations such as retirees.
• Administrative challenges: Wealth taxes are notoriously difficult to implement and enforce effectively. High administrative costs and the potential for loopholes undermine their efficiency, reducing their overall benefit to society.
• Redistribution risks: Forcing retirees to sell their properties does not guarantee wealth redistribution. Buyers may be cash-rich corporations or affluent individuals, perpetuating wealth concentration rather than addressing it.

Conclusion

While wealth redistribution is a noble goal, targeting retired, asset-rich but cash-poor property owners through higher property taxes is unjust and ineffective. It imposes undue financial and emotional burdens on retirees, undermines family stability, and fails to achieve meaningful redistribution. Alternative approaches should be explored to promote a more inclusive society without compromising the well-being of vulnerable groups.