Property, Income and Car Tax in Singapore
This week’s news from California is that, four months after the 2008-9 fiscal year began, the California legislature has managed to pass a budget, one that will try to cover its $42 Billion deficit. The reason for all the delay is the legal requirement from Proposition 13 (1978) for a 2/3 majority to pass any budget or tax bill. And Prop 13 is also the reason for the transfer of school funding from property taxes (as in most other U.S. states) to income taxes and the state’s General Fund. As a long-term Californian who’d love to believe in public schools, I’m very interested in school funding.
Which leads me to reveal something I learned about Singapore’s property tax system:
If you own property (which in the vast majority of cases is an apartment or condo), tax on your property is 4% of its annual rental value. It doesn’t matter how much you paid for it, or how much your neighbors paid for theirs; what matters is the amount you can rent it for. Easy for government assessors to find out this value. How would your property taxes do under this regime? Ours would decrease/
Sales tax: Singapore has a universal Goods and Services Tax (GST) of 7%. Compares favorably with California’s, which is now at 9.25%, and with New Zealand’s, which is 12%. The amount of the GST is almost always included in the marked price on an item, so there are no surprises at the check out counter.
Income tax: Varies from 15-28%. You can claim deductions for your children, stay-at-home homemaker, parents, and maids. (See my other posts for the expenses involved in hiring a maid.)
Cars: Ah, now that California’s finally increased its annual license fees for cars (the issue that brought down the fiscally responsible Gray Davis in 2004), I can reveal that driving is NOT CHEAP in Singapore. A Honda Civic Hybrid, which may cost about $30K in the USA, is $85K (Sing dollars) or about US$57K. I believe that may include the GST, but don’t quote me on that. Lots of parking fees, gas taxes, and a hefty charge every time you take a vehicle into the Central Business District.* And an annual license fee of about $1200. Add to this the law that requires that rolling stock in Singapore be up-to-date – nobody may drive a car over 10 years old. Old cars are junked or sold overseas (to Malaysia, most conveniently, but possibly New Zealand as well). Thus the government of Singapore encourages people to take public transit. Which is quite fine.
What does the country DO with all this revenue? Good schools, fine roads, good public transit, an army and air force, quite impressive library system, and a trillion-dollar reserve that they can draw upon in difficult economic times (see my previous post on this).
*Singapore was the first country to create this tax on congestion, followed by London. All routes downtown have gantries over them, containing electronic billing devices that read your car’s code (the law requires you to purchase and install a transponder on your dashboard) and deduct the amount from your bank account. The amount varies by time of day, and I think it’s about $8 from 7:30-4:30 p.m., less at other times, but never free. Google “Singapore ERP charges” if you want the real numbers.