Property Tax in a City-State: The Case of Singapore

Abstract

This paper examines the nature and structure of property tax in Singapore, an affluent and rapidly ageing city state in Southeast Asia. While the property tax based on annual rental value has a long history and is a well accepted tax in Singapore, it is only about two decades ago that the process of modernizing the tax began. The paper highlights three characteristics of Singapore's property tax. The first concerns the activist and aggressive use of the property tax as an industrial policy and macroeconomic stabilization tool. The second is the close relationship between public housing, property tax, and mandatory savings scheme. As a result, this scheme has essentially substituted for the mortgage finance market in Singapore. Third, there exist large disparities in property tax treatment of public housing which is very lightly taxed, and the treatment of non-residential properties, which are relatively more heavily taxed. The paper suggests a need for more transparent assessment procedures, particularly in the current scenario of deflationary pressures in the property sector. The paper also suggests that the future revenue potential of Singapore's property tax is limited.