In order to reduce business costs, I have decided to cut the property tax rate from 12 to 10 percent. This will improve Singapore's cost competitiveness vis-a-vis other countries. The cut will apply to all properties: commercial, industrial and residential. It will cost the government an estimated $336 million a year.

The cut in property tax rate will take effect from 1 July 2001, when the 25 percent property tax rebate for commercial and industrial properties ends. The reduction will be particularly helpful to small businesses that are tenants of JTC and HDB properties. These businesses have been the main beneficiaries of the property tax rebate for industrial and commercial properties, passed on by the JTC, HDB and other landlords. The government would like to encourage all landlords to pass on savings from the property tax rate cut to their tenants.