Property Tax (Amendment) Bill

Order for Second Reading read.

5.14 pm

The Senior Minister of State for Finance (Ms Indranee Rajah) (for the Second Minister for Finance): Mr Speaker, on behalf of the Second Minister for Finance, I beg to move, "That the Bill be now read a Second time."

The Property Tax (Amendment) Bill 2017 comprises three amendments to the Property Tax Act to update the legislation and introduce new powers to improve tax administration.

A public consultation exercise on the draft Bill was held from 4 May to 25 May this year. The Ministry of Finance (MOF) has evaluated the feedback received and, where relevant, incorporated them in the final Bill.

The Bill has three amendments. First, amendments relating to the Valuation Review Board; second, amendments to clarify and enhance information gathering for tax compliance purposes; and third, amendments relating to digital property tax notices.

First, we will amend the Act to allow the Valuation Review Board, in the absence of any member of the Board due to resignation, illness or any other cause, to continue to hear and determine the appeal if the parties consent and there are at least two remaining members.

This change will provide greater convenience to appellants, and mirrors existing provisions for the Goods and Services Tax (GST) Board of Review. Similar provisions will also be enacted for the Income Tax Board of Review through the Income Tax (Amendment) Bill. The amendment will apply to all appeals held before the Board after the Bill is gazetted, and also to appeals, the hearing of which has begun before the gazette date.

Second, we will amend the Act to provide clarity and enhance the information gathering powers of the Comptroller of Property Tax, the Chief Assessor and the officers authorised by them. The amendment will allow the Comptroller of Property Tax, the Chief Assessor and their authorised officers to require persons to attend personally before them, to provide information at a time and place specified by them. The change will allow the Comptroller of Property Tax, the Chief Assessor and their authorised officers to require any person to be examined orally and provide information for investigation, if the person appears to know of the facts or circumstances concerning the person’s or another person’s properties. The change will also allow the Comptroller of Property Tax, the Chief Assessor and their authorised officers to reduce to writing any statements provided by persons who are required to provide information. Moreover, the change will enhance the penalties for failure to comply with a request for information.

Lastly, we will amend the Act to provide a regulatory framework to implement an opt-out approach for digital property tax notices. The current provisions of the Act require taxpayers to provide specific consent before the Comptroller can issue them with digital tax notices instead of hardcopy notices. The widespread use of computers and mobile devices allows taxpayers to receive digital instead of hardcopy tax notices. The use of digital notices gives taxpayers greater convenience, security and timeliness of alerts. This is part of our move to being a Smart Nation. To enable more taxpayers to benefit from digital channels, the Act will be amended so that digital notices can be sent to taxpayers who have either consented to receiving digital notices, or who have not opted out after having been given notice that they will be issued with digital notices. Taxpayers who wish to continue receiving hardcopy notices can opt out. Taxpayers will thus have the flexibility to manage their preference for hardcopy or electronic (e)-copy at any time. Mr Speaker, I beg to move.

Question proposed.

Mr Speaker: Er Dr Lee Bee Wah.

5.18 pm

Er Dr Lee Bee Wah (Nee Soon): Mr Speaker Sir, I rise in support of the Bill. However, I have a few concerns. One of these is the use of digital notices by taxpayers. It is on an opt-out basis, meaning people will have to specifically choose to receive paper notices. I foresee several potential hurdles. I presume the Inland Revenue Authority of Singapore (IRAS) will send hardcopy notices to everyone, telling them what is about to happen.

The first potential hurdle is if the notices are not in our four official languages. The second potential hurdle is how to opt out. Surely, people will be able to opt out not just online. That would be a real catch-22 situation. People should be able to opt out over the phone, counter, snail mail and so on, and in multiple languages, too.

Let us imagine someone, let us call her Mrs Lim, who does not understand English. If she does not understand the notice or does not know how to go online to opt out, then we automatically stop her hardcopy notices, obviously she will miss her payments. If we then penalise her for it, it will be grossly unfair. I hope IRAS will contact users, maybe those above a certain age who have not used digital notices before, to confirm with them whether they want digital or paper notices.

Even for users who use the Internet, there are issues. Where does the onus lie if a Notice for Payment from IRAS lands in the spam folder or the recipient is not aware of it, or just simply did not receive it? Just to give an example. Recently, an officer from the Land Transport Authority asked me, "Dr Lee, the Urban Redevelopment Authority (URA) officers sent you three emails, you did not reply at all. Was it because you were not happy with them?" But when I checked, I really did not receive three emails from URA. Not a single email. That is why I changed my email lately. So, a missed notice can result in a fine. But should the taxpayer be held responsible in this instance?

Lastly, how does one know when receiving a notification that it is a genuine notice from IRAS, and not sent by someone to commits fraud? Through the media, IRAS has highlighted attempts by people to commit fraud, to infect computers with virus through fake notices. In fact, this is a problem not only with IRAS, but there are many other agencies, too, as well as telecom companies like Singtel. We want to be a Smart Nation. But we need to have a system in place to be smart enough to allow our computer systems to differentiate the fake from the real. Can the Minister advise on this, please? Mr Speaker Sir, in Mandarin please.

(In Mandarin): [Please refer to Vernacular Speech.] IRAS is going to make digital notices the default mode of notification whereby Singaporeans must choose to opt-out in order to continue to receive hardcopy notices. If IRAS only sends out one letter, or the letter is only in English, some Singaporeans might overlook it. I hope that when dealing with the elderly, IRAS can confirm with them first before changing the notification into digital notices.

Even Singaporeans who use the Internet regularly may encounter problems. If the digital notice goes into their spam folder and ends up being automatically deleted after one month, will they be fined?

Another question is whether this will result in more fraudsters pretending to be from IRAS. If we want to move towards a Smart Nation, can the Government step up efforts to protect Singaporeans' online safety?

Mr Speaker: Mr Henry Kwek.

5.23 pm

Mr Kwek Hian Chuan Henry (Nee Soon): Mr Speaker, I stand in support of the Bill. This amendment Bill seeks to refine the appeals process and protect our tax base by strengthening enforcement and information gathering powers and digitising the communications between IRAS and our taxpayers.

While I support the Bill, I would like to flag out some concerns regarding the third objective of the Bill, which is the serving of notices via electronic means. As Members of Parliament (MPs), we all know about the presence of the aged, frail and the vulnerable among our communities. They frequently do not speak English, let alone read English or access the Internet. Some of them are also in a poor state of mental health. And some of them live alone without close family support. They do not form a large part of Singapore, but they do exist. Also, as MPs, from time to time, we sometimes write appeals for residents who face legal issues because they do not pay their bills or fines to the Government in time due to their misunderstanding of the Government's communications, or their inability to use digital channels effectively. Once they get themselves into such difficulties, they face additional fines and even legal worries.

Going into the details of execution, I could imagine some of my frail and vulnerable residents from Kebun Baru running into difficulties. In theory, they could continue to receive hardcopies of the bills if they opt out. But this is only if the opt-out process is properly designed. My concern is if they are asked to opt out electronically or if the opt-out instruction is buried in the small prints in the property tax notices. And worse comes to worst, if the process is not noticed by their caregivers.

So, I would like to ask IRAS to clarify on their proposed framework for implementing this. Will it be implemented immediately to all property taxpayers? Will there be an educational effort to help property taxpayers understand that? In short, is IRAS considering ways to strike a balance between efficiency and inclusiveness, not just for the Property Tax Bill's amendments today, but also for the other tax Bills put forward today?

I would also like to make a broader point about our move towards a Smart Nation. While I share the Government's goal in doing so, it is important we do so in an inclusive way. By "inclusive", I hope our Government actively creates alternatives that are cheap, efficient and simple to use. Let us talk about a particular scenario. If a retiree or a low-income individual is expected to use his or her smartphone to do an electronic transaction, then, (a) he or she must be able to afford a smart phone, even if it is a second-hand one. But unfortunately, this cost is not always factored into our social assistance framework; (b) he or she must be able to afford the data-plan, because free wi-fi signal is not always present in all public places and the sign-on process is currently cumbersome.

I am sure that once we implement Smart Nation, we will think through all these applications and these executional bottlenecks, but I hope that our Government can consider all these issues about digital inclusiveness because we must leave no Singaporeans behind as we move towards a digital future. One way the Government can do so is for the Smart Nation Office to closely consult the Ministry of Social and Family Development and the various voluntary welfare organisations (VWOs) during the design phase while embarking on the digitisation process. Notwithstanding these concerns, I support this Bill as a necessary step to improve our tax system. I support the Bill.

Mr Speaker: Mr Louis Ng.

5.27 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, I again support ongoing efforts to go green with the amendments for an opt-out scheme for an electronic service. This Bill also provides IRAS with further enforcement powers to do their duties, but some of which may be considered slightly intrusive. To address this issue, allow me to seek some clarifications on this Bill.

This Bill makes bold amendments to provide IRAS with stronger enforcement powers. I refer particularly to the new section 64A which gives IRAS “full and free access to all houses, buildings, lands, documents, computers, computer programmes and computer software”.

This gives IRAS the ability to gain access to a wide variety of resources, as it will now be able to acquire any devices and documents it requires. These are powers which some might consider to be excessive and a breach of privacy. People who are under investigation or those who have information regarding the investigation will also be obliged to be personally examined.

I understand that section 64A is similar to the new section 65B in the proposed Income Tax (Amendment) Bill. However, commentators have raised the point that while authorities may need to conduct in-depth investigations on cash transactions of businesses, the case is very different for property tax investigations, where data is widely available.

I would like to ask if we have seen an increase in property tax offences which warrants such an increase in powers for IRAS. Can the Minister provide some justification for the empowerment of IRAS, specifically for property tax investigations?

Further, could we also then anticipate similar enforcement powers for all other forms of taxes in the future?

I also refer to the amendments of section 56 to increase penalties for hindering or obstructing the Comptroller, Chief Assessor or IRAS officers. The increase from the current maximum fine of $2,000 to $10,000, and an imprisonment term from a maximum of three months to 12 months, is a significant jump.

I understand that this increased figure is benchmarked against the GST Act. I do support the increase in penalties to act as deterrence, but can the Minister clarify if these increases are due to an increase in cases of hindering and obstructing?

Finally, I understand that the proposed amendments relating to the exemption of machinery from property tax was not included in the Bill following the public consultation. Can the Minister provide more details on why this was not included and whether it will be conducting further public consultation on this? Sir, notwithstanding the above clarifications, I stand in support of the Bill.

Mr Speaker: Senior Minister of State Indranee Rajah.

5.29 pm

Ms Indranee Rajah: Mr Speaker, I thank Members for their speeches and for their support for the Bill.

It is clear that all four Members support digitalisation but, at the same time, are concerned that people should not be left behind, especially those who are not very IT-savvy or able to deal with digitalisation, and this does the Members credit.

Mr Henry Kwek had asked whether there will be a staged rollout for the opt-out approach for digital tax notices. Er Dr Lee Bee Wah had also asked whether the elderly group will be targeted by the opt-out approach for digital tax notices, and Ms Thanaletchmi has suggested that options for hardcopy tax notices be available, especially for the less IT-savvy residents. All these are valid concerns and they are concerns which IRAS and MOF looked at as well.

In this journey to Smart Nation, we will move forward in ways that make transacting with the Government more convenient for our citizens. But we will also help those who are less digitally ready. As Mr Henry Kwek suggested, what IRAS would do is that it intends to adopt a phased approach to its implementation and start with Property Tax notices for individuals first, then followed by Property Tax notices for businesses. The reason for this is because individuals are familiar with transacting digitally with IRAS. Currently, 97% of individuals who file their income tax returns do so electronically through the IRAS My Tax Portal.

So, let me now deal, first, with the individuals and the residential property owners. Specifically, IRAS will start with individuals who own residential properties and who have provided their mobile numbers to IRAS, such as through IRAS' My Tax Portal typically. So, what this means is that we will start with people who are already transacting with IRAS on the digital platform. Such residential properties make up over 55% of residential properties.

In October 2017, these taxpayers will receive hardcopy letters notifying them of IRAS' plans to issue digital tax notices for property tax payable from 2018. They would also be aware of this initiative through IRAS' educational efforts to publicise this opt-out approach for digital tax notices. These individual owners of residential properties would be requested to indicate if they wish to opt out of digital tax notices and thus continue receiving hardcopy tax notices. If they do not opt out from receiving digital tax notices, then IRAS will notify them via short message service (SMS) from November 2017 when the digital tax notices of Property Tax are ready for viewing on the IRAS My Tax Portal. The SMS will also indicate the amount of property tax due in 2018 and the payment due date. These individuals can log in to their accounts on the IRAS My Tax Portal to view their digital tax notices.

For individuals who have opted out of digital tax notices in October 2017, they will continue to receive hardcopy tax notices from November 2017 for their 2018 property tax. As with previous years, IRAS will be sending SMS reminders around mid-January 2018 to taxpayers if payment has not been received. These SMS reminders apply as well to individual owners of residential properties on digital tax notices. If an individual owner of a residential property on digital tax notice has still not paid by the payment due date, IRAS will issue a hardcopy tax notice then and give the taxpayer sufficient time for payment.

I move on now to those who have not provided their mobile numbers to IRAS. In other words, they currently do not transact with IRAS digitally. Individuals who own residential properties and who have not provided their mobile numbers to IRAS will continue to receive hardcopy tax notices. They will thus not be receiving the hardcopy opt out letters in October 2017. Instead, as per previous years, they will receive the hardcopy tax notices from November 2017 for the property tax payable in 2018.

In addition, IRAS will exclude one- and two-room Housing and Development Board flats and individual residential property owners who are aged 70 and above this year. This is because they either do not have to pay property tax or are less likely to have their mobile numbers registered with IRAS. IRAS will continue to increase the mobile number database by complementing IRAS current database with the mobile numbers of SingPass two-factor authentication-ready taxpayers to extend the benefits of digital tax notices to other taxpayers in subsequent years. So, in other words, phased approach, we take into account those who are elderly and, as the years move on, we will try to add more and more on to the digital database.

In the next phase, IRAS will roll out the digital property tax notices for businesses, including small and medium enterprises (SMEs) and microenterprises. These businesses can also opt out of digital tax notices. Er Dr Lee Bee Wah had expressed concern about the ability of SMEs and microenterprises to cope with digital tax notices. Digitalisation is not new to businesses. For example, GST-registered businesses are already required to e-file the GST returns which are usually filed every quarter through IRAS' My Tax Portal. E-filing of corporate tax returns will be made compulsory, again in a phased approach, from the year of assessment 2018 to 2020. All companies, including SMEs and microenterprises, also e-file their annual returns to the Accounting and Corporate Regulatory Authority. If businesses have been using agents to handle their accounting and tax matters for them, the agent will be able to handle the digital tax notices as well.

Er Dr Lee asked where the onus lies if a notice for payment from IRAS lands in the taxpayer's email spam folder. She also asked how taxpayers can be assured that the notifications and digital tax notices are, indeed, from IRAS.

As explained earlier, the digital tax notices and the notice for payment will not be sent to the taxpayer's personal email account. Instead, this document will be accessible through IRAS' My Tax Portal. Thus, taxpayers can be assured that the notices are, indeed, from IRAS.

We appreciate Members' feedback for the opt-out approach for digital tax notices, and IRAS will continue to provide support for taxpayers who are less digitally ready.

With more specialised buildings being developed in Singapore, properties' specific data which is required to effectively assess the property tax may not be widely available. With increased incidents with uncooperative taxpayers, IRAS requires more powers to properly assess property tax due. The amendments will allow IRAS officers to more effectively deal with uncooperative taxpayers and further strengthen the culture of compliance. The amendment will enhance the information gathering powers under the Property Tax Act, align the information gathering powers under the Property Tax Act with existing information gathering powers under the Income Tax Act, GST Act and Stamp Duty Act. This will make it operationally easier for IRAS officers who might have to carry out a joint investigation involving different tax types.

Further, while data may be perceived to be more widely available for property tax assessments as opposed to other tax types, such as income tax or GST, criminal investigations require investigators to gather adequate evidence, including direct and circumstantial evidence. Investigation powers are, therefore, required under the Property Tax Act to equip IRAS investigators to do their job properly. The enhancement and penalties are in line with the penalties for other tax types and will send a clear signal to the taxpayer community on IRAS' stand against hindering and obstructing.

Mr Louis Ng asked about the proposed amendment on exemption of machinery from property tax. This was not included in the Bill as we are still studying the feedback and we will, in due course, make a decision on the feedback received. Mr Speaker, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Ms Indranee Rajah.]

Bill considered in Committee; reported without amendment; read a Third time and passed.