Government help schemes: Why annual value of a person's home is relevant

MR LIM Tong Wah suggested reviewing the practice of using the annual value of a person's home as a criterion in government subsidy and wealth-sharing schemes ("Flat size not an accurate reflection of income"; Forum Online, July 8).

We agree that government assistance should be targeted at those in greater need. This is why government assistance schemes, such as the Workfare Income Supplement and the GST Voucher, consider both a person's assessable income and the annual value of his home.

While this is not perfect, it provides us with a fair and objective basis to take a person's income and wealth into consideration.

Annual value is a relevant consideration, as among those who do not have income, citizens living in private condominiums, for instance, are generally better off than those living in smaller HDB flats.

For government assistance schemes, those living in five-room flats enjoy the same subsidy tier as those living in four-room flats.

Mr Lim shared the example of the cost of a mammogram at a polyclinic.

Government subsidies are provided to all polyclinic patients, which means they would need to pay only $50 for a mammogram. To encourage regular screening, the cost for women due for rescreening was further reduced through the sponsorship of the Khoo Teck Puat Foundation, a charitable organisation, with the level of sponsorship based on the annual value of their residences.

We recognise that there are those with unique circumstances who may not qualify for government assistance based on their home.

For those facing extenuating circumstances, the Government is prepared to exercise flexibility. They may also consider approaching the family service centre, citizens' consultative committee, community development council or social service office, which are better placed to assess their specific needs and provide the necessary help.

We thank Mr Lim for his feedback and assure him that the Government continually explores ways to refine the eligibility criteria of government subsidy and wealth-sharing schemes, so that help reaches those who need it most.

Lim Bee Khim (Ms)
Director, Corporate Communications
Ministry of Finance

Bey Mui Leng (Ms)
Director, Corporate Communications
Ministry of Health
ST Forum, 24 Jul 2013

Fair system of income, annual value as criteria in place

GOVERNMENT help schemes such as the GST Voucher (GSTV) aim to provide support to those who are less well-off. They use both assessable income (AI) and the annual value (AV) of homes as criteria, as this combination provides a better picture of a person's means than if just one criterion is used ("Govt help schemes: Income more relevant than annual value" by Mr Paul Chan Poh Hoi; Wednesday).

To address one of Mr Chan's points, the AV does not refer to actual rental income earned, which would be reflected in the AI. The AV is a measure of the value of the home, irrespective of whether it is rented out. Besides a person's income, this is an additional measure of how well-off he is.

Most Singaporeans with lower incomes do obtain larger GSTV benefits. This includes, for example, the majority of non-working spouses, who rightly benefit from the GSTV.

However, if GSTV benefits were based on AI alone, those who live in expensive homes and who choose not to work would obtain the same benefits as the poor.

Similarly, using AV alone would mean that Singaporeans who earn high incomes, but who choose to live in flats with lower AVs, would benefit unduly.

Our approach of using both AI and AV as criteria is a practical way of identifying those who are less well-off, from among the full population of adult Singaporeans. It is not perfect in design, but broadly equitable. It also complements other schemes which are less broad-based and allow for more customised assessment of an individual's needs.

We will continue to review the eligibility criteria of government help schemes to benefit those who need greater support.

Lim Bee Khim (Ms)
Director, Corporate Communications
Ministry of Finance
ST Forum, 3 Aug 2013

Income more relevant than annual value

THE annual value of a person's home is not an accurate indicator of his income ("Govt help schemes: Why annual value is relevant" by the Finance and Health ministries; last Wednesday).

After all, the amount of income tax a person pays is based on his annual income and not the annual value of his home.

Annual value is the estimated annual rent of the property if it were rented out. It is not relevant because not every home owner rents out his unit.

The ministries' reply stated that "among those who do not have income, citizens living in private condominiums, for instance, are generally better off than those living in smaller HDB flats".

But this is not always the case. The luxury cars in HDB carparks tell a different story.

A person earning a high income may live in an HDB flat and pay more income tax than someone living in a private condo unit. Does this HDB dweller deserve more government assistance than the person living in the condo?

Moreover, the yearly maintenance charges, sinking fund contributions and property taxes that a private condo dweller has to pay are at least five to six times the fees for a resident in a smaller HDB flat.

A family without income living in a private condo is in fact worse off than a similar household in an HDB flat.

Ultimately, income is the most equitable eligibility criterion in the distribution of a country's wealth.

Paul Chan Poh Hoi
ST Forum, 31 Jul 2013

Flat size not an accurate reflection of income

I AGREE with Mr Munir Shah ("Maid grant: Review use of property annual value as gauge"; June 26).

There are many retirees who worked very hard during their younger days so that they can own their dream home and ensure that they have a roof over their heads when they are no longer working.

Many are surviving on their savings and avoided the need to ask the Government for financial assistance.

I hope the Government will relook the decades-old method of granting subsidies or sharing national wealth according to the property annual value or the type of HDB flat a person lives in.

Recently, my relative went for a mammogram at a polyclinic with her friend. Her friend paid $2 but my relative paid $25.

Both are under the Community Health Assist Scheme (CHAS). The friend held an Orange card and my relative held a Blue card. Holders of Orange cards have a household income higher than that of those with Blue cards.

The irony is that the person with the higher household income enjoyed a higher subsidy than the person with a lower household income.

I asked the Health Promotion Board about this and was told that the reason was because we lived in a five-room HDB flat whereas the friend lived in a four-room HDB flat. This is despite the fact that we earn less compared to the friend.

Giving more to people earning more, and less to people earning less, is definitely not the right way to go.

Using HDB flat type as a criterion for subsidy assessment is outdated as people today have different expectations and lifestyles compared to the older generation. Owning a smaller flat does not equate to a lower income.

I hope the relevant ministries and authorities will review this wealth assessment system and give more to the people earning less.

Lim Tong Wah
ST Forum, 8 Jul 2013

Maid grant: Review use of property annual value as gauge

I WAS delighted when the Finance Minister announced during last year's Budget that there would be a Foreign Domestic Worker Grant for households with elderly or disabled members, to help them hire a maid.

I applied for the grant and was optimistic I would qualify as I am caring for my ailing 83-year-old mother.

I was pleased with the empathy shown by the staff of the Agency for Integrated Care, but was disappointed that my application was rejected on the grounds that the annual value of my landed property exceeded the ceiling of $13,000.

My semi-detached house was bought for just $125,000 in 1977. The fact that its annual value is now $38,400 is purely academic because as an owner-occupier, I do not earn any rental income.

Being a retiree, I live on my life savings, and support my elderly mother and four other members of my immediate family.

I hope the relevant authorities will show some compassion as I am sure there are other retirees in a similar situation.

Munir Shah
ST Forum, 26 Jun 2013