Property in Singapore taxed less than food and water...why?

[cherry6]

Luxury in Singapore taxed less than food and water...why?

Luxury in Singapore taxed less than food and water...why?
... because rich Singaporeans and Foreigners shouldn't luxuriate at the expense of the poor.

On 03May2012, a Singaporean offered to sell his 12000 sqft(built-in), 20000 sqft / (land) bungalow for $108Million 'S$108m for a Sentosa Cove home' [TODAY, 09May2012].

According to 'How is property tax computed' [IRAS, 2Dec2011], owner occupied residential properties [criteria] since 1Jan2011 are taxed as follows:
Annual Value:Tax Rate:
First $6,000:0%; Next $59,000:4%; Amount exceeding $65,000:6%

The current Goods and Services Tax (GST) rate in Singapore is a flat 7% for all goods and services provided by GST registered companies/ services. [Wiki:Goods and Services Tax (Singapore)]: "[GST] was increased to its current rate of 7% on 1 July 2007".

Thus begging the question, shouldn't a large and luxurious bungalow in Singapore, where according to 'Public housing in Singapore' [NLB, 15Oct2009]: "It is estimated that more than 80% of Singapore's resident population now live in public housing..." an obvious luxury be taxed at a rate equal or more than necessities utilized by all/ the poor (food, medicine, water)?

The definition of 'Owner Occupied' also begs clarification. Does a foreigner using a Singapore property for property for investment (price appreciation)/ holiday use (2weeks/ annum) but otherwise vacant also qualify for the said owner occupied property tax concessions- how would IRAS know given that taxes are charged prospectively rather than retrospectively? Shouldn't the efficient use of space whether rented or private be equally rewarded? - Why are property renters being unnecessarily penalized?

According to IRAS, the usual property tax rate for tenanted and vacant residential properties is 10%: does this artificially distorted tax rate then cause property rentals to increase thus forcing all Singaporeans (PRs and foreigners) to own their own properties- a key source of inflation of property prices overall? Are the prices of property rentals in Singapore thus inflated, can property prices in Singapore be accurate if property rentals in Singapore are actually inflated?

If the intention of charging owners of vacant/ tenanted properties a higher tax rate was on the premise that such properties were owned by rich people, then wouldn't the owner of a $108Million Sentosa cove bungalow be a case of a very rich underpaying for his luxury in a land where food and medicine is taxed unwaveringly at 7%? The government must be nuts if not corrupt for tax rates on the poor to exceed those for the rich.

In 1Q2012, an Indian national bought surgeon Susan Lim's Sentosa bungalow for $39Million 'Indian national buys Susan Lim's Sentosa Cove home for $39 million' [BT, 02Mar2012], assuming a 3% rental pricing based on cost, the annual value of the S$39M bungalow would be $1.17Million. If the owner were to be charged standard 7%GST on $1.17M, the amount would be $81.9K but based on current owner occupied concessionary rates, the Indian national owning the said bungalow would pay only [(6k*0)+(59k*0.04)+(1.105M*0.06)]= $68.66K, which is a $13.24K discount compared to if a flat 7% had been charged. With necessities of poorer Singaporeans attracting 7% GST, for what reason should the rich Indian expat be luxuriating on Sentosa whilst enjoying tax discounts amounting $13.24K p.a.? Politicians have betrayed the poor in Singapore by choosing to tax necessities of the poor more than luxuries enjoyed by the rich.

The current high property prices in Singapore is also a significant depressant on Singaporean birth rates: 'Housing woes affecting birth rates' [ST, 05Sept2011]: "Although the fertility rate is stubbornly less responsive to many factors, it is possible that sustaining housing affordability may help at least in arresting the precipitous decline in the fertility rate" certainly requisites urgent reconsideration if Singaporean birth rates are to be encouraged.

In view of this significant asset inequality (as consequent to growing income inequality [link]) in Singapore, it is suggested that any increase in property taxes collected in going forwards be REDISTRIBUTED EQUALLY amongst ALL Singapore citizens (aged 0-120yrs) with PRs (residing here at least 182 days or more) receiving about half as a 'National Cohesion Dividend' (NCD) used firstly to settle property taxes/ rental of flats from HDB as the case might be with the excess channeled to CPF (some OA/ dividend account perhaps)- some low income households sharing cramped quarters might well find themselves with some extra cash given to the fact that the property taxes on their lodgings do not amount to much whilst singles living in expansive bungalows and foreigners speculating in Singapore properties would see their tax bill increased due to fewer (or zero) occupants sharing the tax- property would then be used more efficiently, perhaps freeing up some for the market. Those who want more comfort or prestige would just have to pay for the luxury whilst those who live with less would enjoy the fruits of this asset re-distribution procedure: overnight, Singaporeans would find citizenship TWICE as meaningful as it was before and foreigners would compete for Singapore citizenship/ PR status which of course Singaporeans must keep a finger on to avoid dilution of everyone's NCD- however, too steep a fall in property prices locally would also cause tax revenues to fall as conversely affect the NCD so Singaporeans cannot be too fussy either.
The CPF dividend account would then be usable for paying certain fees or withdrawal (joblessness/ insurance/ CC activities/ self improvement/ medical treatment/ other allowable dues within limits as assessed by government social workers)

[Bungalow House For Sale - THE ULTIMATE SENTOSA BUNGALOW(D04)]

 

[tqx]

Property tax payable yearly not when the properly is sold. You want to increase property tax siao bo, it will affect all SG....You calculations is based on the property tax being paid when it is sold which is entirely wrong.

You should calculate Stamp duty and additional stamp duty for foreigners, You will be surprised at how much tax is paid. For a 100m property, BSD + ABSD is more than 13m.

GST is charged when goods exchange hands. Water , food are goods so you should look at stamp duty

 

[sunzoner]

I guess the title was amended after tqx made his comments.

However, cherry6 should note that offering a property at one price, doesnt mean a person can sell it at that particular price. Otherwise, I can retire liao.

 

[cherry6]

Property tax payable yearly not when the properly is sold. You want to increase property tax siao bo, it will affect all SG....You calculations is based on the property tax being paid when it is sold which is entirely wrong.

You should calculate Stamp duty and additional stamp duty for foreigners, You will be surprised at how much tax is paid. For a 100m property, BSD + ABSD is more than 13m.

GST is charged when goods exchange hands. Water , food are goods so you should look at stamp duty

That property tax is payable is not an issue in my essay.

"You want to increase property tax siao bo, it will affect all SG."- There is no problem with increasing property taxes since I have CLEARLY stated that this is in the context of an asset redistribution policy, the need for which being consequent to years of growing income inequality.
Consequent to the necessity for 'asset redistribution policy', ALL added property tax collections consequent to the across-the-board increase would be FULLY redistributed as a share to both Singaporeans and PRs such that Singaporeans receive TWICE the amount that PRs receive. An additional rule for qualifying PRs being that they reside within Singapore for >182days annually.It is expected that at least 50% (or more) Singaporeans will be affected positively by this such policy.

Stamp duty is only applicable to property transactions and many of the new policies are only temporary and perhaps as fickle as the operations of the Singapore MRT. The preferential redistribution of property tax dividends benefits (especially poorer) Singaporeans directly as well as transparently rather than the ABSD which is temporary and will not reduce public housing prices directly.

 

[cherry6]

Progressive property taxes towards the alleviation of poverty.

Progressive property taxes towards the alleviation of poverty.

Original thread: Luxury in Singapore taxed less than food and water...why?
I guess the title was amended after tqx made his comments.
However, cherry6 should note that offering a property at one price, doesnt mean a person can sell it at that particular price. Otherwise, I can retire liao.

Cosmetic change only, meaning remains unchanged.

The intention to harmonize property taxes with GST rate would be

1. Asset redistribution policy to counter balance growing income disparity.
2. As a good, both the 'annual value' (AV) of a property, food and water may be considered services and consumables that are consumed over time. Since basic necessities are unwaveringly taxed at a flat rate of 7%, there is no logical reason why, but for cronyism and bigotry that a discretionary consumable such as the AV should be taxed at a rate lesser than that for basic necessities on which tax the poor in Singapore are subjected to.
3. Singapore must not be place where the taxes of the poor subsidize the decadence of the rich- luxury has its price and property in Singapore ought be price correctly.
4. Foreigners using SG properties for investment/ speculation, falsely reporting vacant properties as 'owner occupied' will no longer enjoy reduced property taxes and as such be encouraged to rent them out to compensate for the increase taxation. The consequence of greater availability of properties for sale/ rent will surely correct property prices since the inefficiency of having empty (holiday) properties would be greatly reduced.
5. Singaporeans will know that besides $400 monthly allowance, their NS also pays dividends since they can be assured that a portion of Singapore property taxes collected from rich Singaporean and foreigners will be re-channeled as a form of allowance dividends that would help offset the living costs of ALL Singaporeans (and some PRs too).
6. I have never heard of IRAS checking upon the passports of foreign owners of properties here to see if owner occupants really stay for at least 183 days each year- exploiters of this loophole will see this loophole closed.
7. Charging the claimed 10% for tenanted properties, whilst disadvantaging owners of vacant/ tenanted properties also causes distortions to the property rental market by artificially inflating rental prices. It is highly suspect that higher rentals also inflate property prices thus causing widespread distortions in property prices in Singapore. These negative distortions are man-made, unnecessary and have no place in a mature economy.
8. Re-channeling property tax dividends to all Singaporeans would also subsidies those unable to own properties in the rental of their properties. This can also apply to the dividends from the charging of GST, for any increases in GST, it is also suggested that tax dividends collected be recirculated back to society in such an equal, fair and transparent manner, both property tax and GST in tandem can then be adjusted to obtain the optimal amount of consumption for the optimal number of members in a given society.
9. Whilst some rich might currently care for the poorer in society for purely altruistic reasons, ALL rich will now have added impetus to care for the poor i society knowing that their an across the board GST increase would also encompass their luxurious properties should poverty remain unattended within society.
10. I'm not asking for zero poverty by a substantive and equitable reduction of such. Whilst all persons receive such dividends, there shall be restrictions to the use of such through the CPF system: e.g. for the payment of one's property tax (using current dividend only, not dividend savings), education (accredited national institutions), jobless/ under employment cash benefits (annual limit), healthcare (annual limit), accredited self improvement courses at CC etc etc.

Just my 2c about how taxation can alleviate poverty and achieve better taxation accountability to all Singaporeans (/the poorer ones at least).


Rgds
C6.

 

[tqx]

Property tax and GST got no relation at all other than they are both taxes. Like that you might as well say align Road tax with GST, align income tax with GST etc...GST is charged on a consumption basis , while property tax is charged on a recurring basis.

The government does not need additional income to redistribute wealth, we are running a surplus unlike Greece or France where taxes are high to provide money for social welfare. It is whether the government feel a need to do that or not,if they feel a need they got the money already to do it. We are not communist or socialist so asset reallocation is not really mainstream here.

Property tax is a small trickle in the water compared to taxes like income tax and GST. If want to tax foreigner just increase their income tax lor. Also , although prices sound large at sentosa cove, foreigners cannot buy SG landed property except at gazetted area like sentosa cove.

 

[wallacetan]

Progressive property taxes towards the alleviation of poverty.

cherry6, I have posted 2 replies to your "using property tax to control property price inflation" and "poor subsidizing the rich" statements.

You don't like my answers?
Or you don't want to answer my questions?
Is that why you change (Cosmetic) your statement to "alleviation of poverty"?
And post the same re-worded post in another forum?

If the rate of money creation is keep this high, like the floodwater, it will still flow to other asset classes.

Do you really want food prices to be inflated?

How would that affect the 'poor'?

The 'Rich' still pays more in dollars with the progressive property tax rebate of 4%.
When will the 'Poor' EVER pay $59K in property tax?

Please explain how does 'Rich' pay $59K V.S. 'Poor' pay $0 in property tax, means "poor subsidizing the rich"?

 

[wallacetan]

The intention to harmonize property taxes with GST rate would be

Since you admitted this:

admitting that I have formal training in neither public policy nor economics

You should at least try to learn and understand the economics principles and theory BEFORE you try to come up with any public policy statements like these.

The level of your understanding and logic is embarrassing.

Please Go and Read Economics in One Lesson by Henry Hazlitt

 

[wallacetan]

1. Asset redistribution policy to counter balance growing income disparity.

Just my 2c about how taxation can alleviate poverty and achieve better taxation accountability to all Singaporeans (/the poorer ones at least).

I have replied to this already, waiting for your response.
What is your 'Magic' number to draw the poverty-line?

Do you think it is moral to steal from one group to give to another group?
Do you think it is moral for the Government 'middlemen' to take a HUGE 'cut' BEFORE giving to another group?

How do you define poor? How should the government define poor? Where to draw the poverty-line?
Earn $500, $1000 or $999.95 a month?
2 or 3 meals a day?
"How much do you want? Do you want three meals in a hawker centre, food court or restaurant?" - Vivian Balakrishnan

How do you define rich? How should the government define rich? Where to draw the wealthy-line?
1 or 2 cars?
2 or 3 credit cards?

How low do you want property prices to be reduced? How low should the government reduce property prices?
Reduce by 10%, 20% or 21.375% ?

You believe it is moral to take (steal) from 'rich' to give to the 'poor'?
You believe the Government knows best?
You believe that there is 'Magic' number to draw the poverty-line?

Maybe you should give $10 to your neighbor who earn less (poorer) then you?
And maybe give another $20 to another neighbor who just had a baby (baby bonus scheme)?

What would you say to this?

That is what Taxation and Government do.
And they take a percentage of your tax dollars to pay themselves multi-million dollar salary before they re-distribute to the 'poor' and 'needy'.

Wait, isn't this what NKF's T. T. Durai did?
NKF takes more then 50% of donations, every $1.00 donated, only $0.50 is used to subsidise kidney patients.
He was paid a total of S$600,000 in both 2003 and 2004.

If you like NKF 'middleman' getting a 50% cut of donations meant to for kidney patients, you will LOVE the Government 'middlemen', where 100 more bureaucrats paid multi-million dollar salary to do exactly what Durai did.
Only difference, Government 'middlemen' are getting paid more then T. T. Durai.

Which explains the comment on "1 peanut == S$600K"
Her husband did the same job as Durai, but Durai is paid only peanuts compared to her husband.

I am not for any polictical party, all parties are just as wastefull when they promise to 'do or give stuff' for you.

For every $100 Government gives you, you should know that it cost taxpayers $200.

The Government 'middlemen' will take a 'cut' of all subsidies or "National Unity Dividend (NUD)", they need to pay the ministers, department heads, back-office staff, front-office staff, office space, IT equipment, website creation, marketing/public relations, security guards, enforcement officers, bonuses, and the list goes on.

Just be wary when someone offers you a free lunch, there ain't such a thing as a free lunch.

 

[wallacetan]

Consequent to the necessity for 'asset redistribution policy', ALL added property tax collections consequent to the across-the-board increase would be FULLY redistributed as a share to both Singaporeans and PRs such that Singaporeans receive TWICE the amount that PRs receive. An additional rule for qualifying PRs being that they reside within Singapore for >182days annually.It is expected that at least 50% (or more) Singaporeans will be affected positively by this such policy.

Will you be "positively affected" by this such policy?

 

[wallacetan]

Economics in One Lesson by Henry Hazlitt
The Lesson

Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine-the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

In this lies the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.

 

[wallacetan]

The Story of Free Enterprise from Free Enterprise Alliance

"Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity, are then most thriving when left most free to individual enterprise."
Thomas Jefferson

 

[cherry6]

Transparent consumption (property) taxes with rebates to all- a way forward towards a modern, compas

Transparent consumption (property) taxes with rebates to all- a way forward towards a modern, compassionate and productive society.

Property tax and GST got no relation at all other than they are both taxes. Like that you might as well say align Road tax with GST, align income tax with GST etc...GST is charged on a consumption basis , while property tax is charged on a recurring basis.
The government does not need additional income to redistribute wealth, we are running a surplus unlike Greece or France where taxes are high to provide money for social welfare. It is whether the government feel a need to do that or not,if they feel a need they got the money already to do it. We are not communist or socialist so asset reallocation is not really mainstream here.
Property tax is a small trickle in the water compared to taxes like income tax and GST. If want to tax foreigner just increase their income tax lor. Also , although prices sound large at sentosa cove, foreigners cannot buy SG landed property except at gazetted area like sentosa cove.

"Property tax and GST got no relation at all other than they are both taxes..."
Yes, they are all taxes, and tax is in general defined as a "charge against a citizen's person or property or activity for the support of government" in short, since consumption is the general function of human beings, governments by nature of their electoral mandate have the right to tax such consumption both as a revenue source, as well as to optimize use of current resources> GST, ERP, COE, Road tax, water conservation tax, library 'fines' all have a function, either more or less along the same scale of adjusting human behavior as well as providing for government revenue. E.g. library fines discourage users from returning books late, ERP encourages the use of public transport to alleviate congestion on limited roads.

The govt has decided NOT to have tiered GST according to consumable item type due to the difficulty in differentiating consumables of the rich from those of the poor, necessities vs luxuries, to ease accounting and so minimize tax losses due to mistake or evasion: e.g. there ar many types of rice found within supermarkets that cost anywhere between S$1/kg and perhaps even $10/kg (at least $6 I think) depending on quantity and quality (organic, novelty strains)- whilst the rich might choose $6/kg brands, the poor settle for $1/kg options (got weevils also maybe). This consistency is then balanced by compensatory legislature to which poorer Singaporeans are then awarded cash voucher amounting to at least their annualized increase in living expenses consequent to the increase in GST- an all encompassing general consumption tax.

Incidentally, property is also a discretionary item insofar as a wide variety of residential properties exists to provide varying standards of living depending on location, facilities and the occupants per unit. More luxurious properties also have built-in facilities such as private pools, tennis courts and in the case of some Sentosa sea-front bungalows, a private pier for berthing your private boat.

Of all taxes, property taxes is best aligned with GST. Indeed, with the govt's current drive to raise revenues (taxes) come 2017 [TODAY,02Mar2012(pict)], the govt could easy tier property tax further to 0% for first $10k of AV, 7% for next 50k and 10% on amt in excess of 60K. (The highest personal income tax rate is 21%, pls don't make me suggest 21% here also).

Another argument to to implement a freehold property tax could be akin to the cost of investing in gold. As I understand, some gold ETFs charge up to 0.4% p.a. as storage fees (security of a vault); PAP says that the property value in SG is reflective of the security provided to the nation by the SAF whose annual military budget is well above S$10 billion p.a., shall the govt also opt to charge an 'national military defense' (aka airport security surcharge) of 0.4% p.a. upon the latest transacted price of properties also? (That's $4K p.a. protection fee for a $1M property in addition to GST upon the AV) I'm not pushing for this but please just understand that that the excuses to increase property taxes are multifold.

"GST is charged on a consumption basis , while property tax is charged on a recurring basis."
Property taxes are charged on a recurring note simply because unlike a hamburger, property is a recurring use device. AV simply attempts to annualize property values so that property tax, aka GST for properties can be accessed.

The current tiered property tax schemes favoring owner occupancy is also full of loopholes exploitable by foreigners. Does a rich Indonesian owning a vacant a $19M 3000sqft Patterson Hill condo but listed as owner occupied enjoy the owner occupied discount tax rate (used infrequently for shopping excursions only; purpose = price appreciation)? Does IRAS really bother to counter check owner whereabouts? Does residing within the unit for a day each year also qualify as owner occupation? Is this discount a loophole that foreigners exploit whilst speculating/ investing in Singapore properties purely for monetary gain and as such promoting the formation of a property bubble?

In conclusion, residents of owner occupied private properties enjoy luxury services and facilities such as swimming pools, tennis courts and free parking, not to mention much more luxurious surroundings at a lower consumption taxes compared to the everyday goods which are taxed at 7%. It thus remains unfortunate that in Singapore, necessities like food and water are taxed at 7% whilst privately used luxuries of the rich are subject to a tax rate much less.

Rgds C6.

 

[wallacetan]

The govt has decided NOT to have tiered GST according to consumable item type due to the difficulty in differentiating consumables of the rich from those of the poor, necessities vs luxuries, to ease accounting and so minimize tax losses due to mistake or evasion: e.g. there ar many types of rice found within supermarkets that cost anywhere between S$1/kg and perhaps even $10/kg (at least $6 I think) depending on quantity and quality (organic, novelty strains)- whilst the rich might choose $6/kg brands, the poor settle for $1/kg options (got weevils also maybe). This consistency is then balanced by compensatory legislature to which poorer Singaporeans are then awarded cash voucher amounting to at least their annualized increase in living expenses consequent to the increase in GST- an all encompassing general consumption tax.

'Poor' people rice - S$1/kg - GST @7% = S$0.07/kg
'Rich' people rice - S$6/kg - GST @7% = S$0.42/kg

'Poor' will always pay less in taxes then 'Rich'.
Why do you still need tiered GST?

Is this discount a loophole that foreigners exploit whilst speculating/ investing in Singapore properties purely for monetary gain and as such promoting the formation of a property bubble?

Sure you can stop the property bubble with higher taxation, but you keep forgetting that the rate of money creation (inflation) is keep this high, in a low interest rate environment, like the floodwater, it will still flow to other asset classes.

You can divert money away from property investment, and prevent the property bubble, but you will get bubbles in other asset classes.

Do you really want food prices to be inflated?

How would that affect the 'poor'?

In conclusion, residents of owner occupied private properties enjoy luxury services and facilities such as swimming pools, tennis courts and free parking, not to mention much more luxurious surroundings at a lower consumption taxes compared to the everyday goods which are taxed at 7%. It thus remains unfortunate that in Singapore, necessities like food and water are taxed at 7% whilst privately used luxuries of the rich are subject to a tax rate much less.

'Poor' people rice - S$1/kg - GST @7% = S$0.07/kg
'Poor' people property tax on property of x value - S$0
'Rich' people property tax on property of y value - S$59,000

The 'Poor' have always paid less taxes compared to the 'Rich' no matter how you try to explain it.

However, the 'Poor' enjoys the same services from the Government, the 'Poor' gets to use the same schools, beaches, hawker centers, HDB flats, roads, MRT, Next Generation Nationwide Broadband Network (NGNBN) as the 'Rich'.

How is this fair?
Why should the 'Rich' be penalized?
Are you trying to force the 'Rich' (foreigners and Singaporeans) away from Singapore?
You want the 'Rich' to go elsewhere, to Malaysia/Indonesia/Thailand/Hong Kong/Macau/Maldives/etc?
You think only Singapore have water front (Sentosa Cove type) properties?
You think 'Rich' people so stupid, stay in Singapore and let Government tax them to death?
You think Singapore is the only and best place in the world?
You keep forgetting we are only a small red dot.
Global competition prevents us from raising taxes.

On 18 August 2000, the world’s largest ocean carrier, Maersk Sealand, announced that they were going to move their transshipment operations from Singapore to the Port of TanjungPelepas (PTP) in Johor, Malaysia.
http://www.maerskline.com/link/?page=lhp&path=/asia/malaysia/general/introduction

Companies move entire operations due to lower taxes and Government bureaucracy.

'Rich' people just need to sell their Sentosa Cove property and purchase another one in Malaysia/Indonesia/Thailand/Hong Kong/Macau/Maldives/etc.

 

[cherry6]

Calculation to show that consumption tax rates for the poor exceed (discount) rates enjoyed by the r

Calculation to show that consumption tax rates for the poor exceed (discount) rates enjoyed by the rich.

Discussn Thread: Property in Singapore taxed less than food and water...why?
cherry6, I have posted 2 replies to your "using property tax to control property price inflation" and "poor subsidizing the rich" statements.

You don't like my answers?
Or you don't want to answer my questions?
Is that why you change (Cosmetic) your statement to "alleviation of poverty"?
And post the same re-worded post in another forum?

Hi wallacetan,
Thanks to discussion/ research (and the CNA 'Talking Point' discussion about low wage workers on Tuesday), my original rant about interest rates being unsuitable for the control of property price inflation (its a last resort measure) (incidentally also the position of MAS (see ST:Tues08May2012: B18: Pre-emptive moves to cope with ballooning asset prices? Mas prefers Striking for stability with targeted steps))

Perhaps the title of my latest essay (this thread): 'Transparent consumption (property) taxes with rebates to all- a way forward towards a modern, compassionate and productive society.' best describes my genuine position- but that's not to say that I've abandoned the previous thread- I read your contributions and will respond at earliest occasion.

In the mean time, it seems that the old thread 'Interest rate' solution to inflation- a case of mere optical illusion?' [link] has since morphed into a discussion about the Euro debt crisis, the executive right for the government to spend tax payer's monies and the efficiency if justified, integrity and solvency of the FED and even confusingly as you have just appended in the post to which I am quoting, the ability of interest rates to prevent new USD created form inflating property prices. I guess economic isn't a simple subject as your reference to 'The Lesson' by Mr Hazlit has amply implied "Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine-the special pleading of selfish interests."

This thread is currently on CAL as I think public discourse on the specific topic of property taxation is better than the ivory tower discussions about how the flood of $$ creation will inflate prices and how the use of interest rates might then be used to solve this aberration.

In the interest of thread consistency, I shall thus refrain from responding to your quoted question about money creation vs interest rate inflation as a solution to property price inflation. That shall be discussed at the source thread in due course.

Your second quotation from 'Interest rate' solution to inflation- a case of mere optical illusion?' [link(pg4)] as follows shall however be answered as follows:

The 'Rich' still pays more in dollars with the progressive property tax rebate of 4%.
When will the 'Poor' EVER pay $59K in property tax?
Please explain how does 'Rich' pay $59K V.S. 'Poor' pay $0 in property tax, means "poor subsidizing the rich"?

I think U have misinterpreted '$59K' which refers to the annual value(AV) band to which (subsidised owner occupied) AV within which accrues a 4% property tax rate. A really doubt anybody in SG pays ppty tax of $59K since even by my calculation (see FP this thread) ppty tax at current rates for the still unsold S$108M Sentosa property would be $68.66K according to current tax rates and I don't know of any other private residential properties in SG costing S$108M today.

Your example of the $20K p.a. salaried 'poor man' vs someone earning 10X more is also inappropriate in so far as you confuse the issue of consumption tax rates with total tax paid. That the rich pay nominally more in tax that the poor is not the issue here; what bugs me here is the consumption tax rate upon the rich being less than the effective rate as applied to the poor.

Creating an example similar to your 20K p.a. (Mr P) vs $200K p.a. (Mr R) salaried individuals, and assuming that the AV of their homes is 30% of their annual salaries which is equal to the annual home mortgage payment for Mr R and the rent payable by Mr P, and neither save any of their salaries, the following calculation applies:

Mr P:
GST on Living expenses = 70%*20K*7%= $980
Ppty tax on AV of $6K= $600 (imputed tax on rent payable at 10% for a tenanted property).
Total Consumption tax paid= $980 + $600
Consumption tax rate= $1580/$20,000=7.90%

Mr R:
GST on living expense of = 70%*200K*7%= $9800
Ppty tax on AV of $60K= Zero for first 6K, and 4% on next 54K=$2160
Total Consumption tax paid= $9800 + $2160= $11,960.
Consumption tax rate= $11,960/$200,000=5.98%.

In conclusion at present, using the example a/m indicated, Mr P's consumption taxation rate is approx 32.1% higher than that of Mr R.

A harmonization of the property tax rate with rebates to all citizens however will show the following results:

Poor man: GST on Living expenses (incl AV of property)= 20K*7%= $1400
Change in consumption tax paid= $1580- 1400= $180
Consumption tax rate (Harmonized)= 7% (flat)

Rich man:
GST on living expense (incl AV of property)= 200K*7%= $14,000
Change in consumption tax paid= 11960- 14000= -$2040.
Consumption tax rate (Harmonized)= 7% (flat)

Assuming that in society, there are 3 Mr P to 1 Mr R, the average National Cohesion Dividend (NCD) payable to each citizen arising from harmonized property taxes collected shall be:
[(-180*3)+(2040*1)]/4 = $375

Effect of this asset redistribution assignment:
Mr P: Net gain: $375+180= $555.
Mr R: Net gain: -2040+375= -$1665


It can however be argued that due to Mr P's inability to afford to own his property, Mr P previously (needlessly) paid $600 p.a. unnecessarily as a result of being a tenant in his property, the $555 is merely fair compensation for the hardship and pain that Mr P experienced previously. Many low wage workers the likes of Mr P also have a hard time coping with inflation, more needs to be done to assist the likes of Mr P as Singapore strives to be a cohesive modern island city state.

 

[wallacetan]

It can however be argued that due to Mr P's inability to afford to own his property, Mr P previously (needlessly) paid $600 p.a. unnecessarily as a result of being a tenant in his property, the $555 is merely fair compensation for the hardship and pain that Mr P experienced previously. Many low wage workers the likes of Mr P also have a hard time coping with inflation, more needs to be done to assist the likes of Mr P as Singapore strives to be a cohesive modern island city state.

From your example, the 'Rich' still pays more then the 'Poor' and they get to use the same sevices provided by Government.

Are you saying it is OK to STEAL from the 'Rich' because you are 'Poorer'?
And since the 'Poor' people cannot STEAL directly, the Government should STEAL from the 'Rich' on behalf of the 'Poor'? Like Robin Hood?

Or you believe the 'Rich' owes the 'Poor'?
So if i earn less then you, YOU owe ME?

Or you think 'Rich' people are so stupid, stay in Singapore and let Government tax them to death?

 

[wallacetan]

I guess economic isn't a simple subject as your reference to 'The Lesson' by Mr Hazlit has amply implied "Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine-the special pleading of selfish interests."

I have only quoted a paragraph in from the book's chapter 1, page 1. There are 25 chapters in this book.

There is an entire book waiting for you to read BEFORE you try to come up with any public policy statements like these.

Please Go and Read Economics in One Lesson by Henry Hazlitt
Economics in One Lesson

 

[cscs3]

You tax 100% of my $4 chicken rice is only $4 extra.
If you tax 10% of the 1M$ house is 100K. This excluding those items you need to purchase inside the house.

 

[cscs3]

From your example, the 'Rich' still pays more then the 'Poor' and they get to use the same sevices provided by Government.

Are you saying it is OK to STEAL from the 'Rich' because you are 'Poorer'?
And since the 'Poor' people cannot STEAL directly, the Government should STEAL from the 'Rich' on behalf of the 'Poor'? Like Robin Hood?

Or you believe the 'Rich' owes the 'Poor'?
So if i earn less then you, YOU owe ME?

Or you think 'Rich' people are so stupid, stay in Singapore and let Government tax them to death?

The word is not STEAL. The correct word to use is "use". Example, if you are the poor, even you pay tax for 10 years is not enough to build a road in front of your house. But bovernment use the tax collected from rich and many other to build the road for you to use it.

If you think this is not right. Find another way to live eg, never get out of your house or try to die faster so you do not use something that is not contribute by others !

 

[tqx]

You are still missing the point Property tax unlike GST is not based on consumption , you already pay 13% tax when you buy property as a foreigner at the point of buying