Candidate payment vehicles

This section presents several candidate payment vehicles for respondents to pay for noise abatement measures that reduce ambient noise. Johnston et al. (2017) suggest that the payment vehicle should be realistic, credible, familiar and binding for all respondents. However, the choice of the payment vehicle is dependent on the survey context and there is no consensus in the literature on the selection of specific payment vehicles.

There is currently no payment vehicle for residents in Singapore to pay for lower levels of noise. Hence, the choice of payment vehicle for both surveys is problematic. Since there is no clear choice for the payment vehicle, several payment vehicles are presented in this Section. The pros and cons of each of these payment vehicles are discussed. These payment vehicles will then be pre-tested during the focus group discussions.

Taxes. In reality, government expenditure to reduce noise is funded by tax revenue. Hence, implementing more noise abatement measures requires higher levels of expenditure paid for by increased taxation. As such, a possible payment vehicle may be increased taxes paid by every Singapore resident.

The two main sources of taxes paid by residents are the personal income tax as well as the goods and services tax, both of which account for around 14% of government revenue in 2017 (MOF 2018b). As such, these taxes could potentially be used as payment vehicles. Respondents are familiar with these vehicles as they are levied on a large proportion of the population.

However, there are several downsides to the use of these taxes as the payment vehicle. First, respondents may be averse to paying additional taxes as taxes accrued to the government are generally not earmarked for specific purposes. As such, additional tax payment may be viewed as fungible and government spending is not transparent to the general public. Consequently, respondents may feel that increased tax payments will not directly lead to the effective provision of a quieter environment since a detailed breakdown of government

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expenditure for specific government policies is not available publicly. Respondents may respond by protesting against the payment vehicle, leading to an underestimate of the marginal benefits of noise abatement.

Second, in general, Singapore’s personal income and goods and services taxes are collected based solely on the individual’s income and expenditure respectively. Payment for noise abatement may cause individuals affected by noise pollution to pay more taxes to reduce the level of noise. This unequal imposition of tax may be rejected by the average respondent. Further, residents living near noisier areas are likely lower-income individuals who will likely reject a higher tax payment to fund noise abatement measures.

Third, specific to income taxes, only around 45% of Singapore’s residents pay income taxes. Singapore’s population is 3.93 million38 _{in 2016 and only 1.76 million individuals paid} taxes in the same year (IRAS 2018; Statistics Singapore 2018d). Since a substantial proportion of the population does not pay income taxes, it may be difficult for these respondents to envision having to pay taxes solely for noise reduction purposes. The lower income residents will also be likely to be living in noisier areas, and a proposed increase in taxation for these residents may cause higher rates of protest responses.

Fourth, Singapore’s government proposed an increase in goods and services tax in the 2018 government budget (MOF 2018a). There was a significant public backlash against the proposal (Chia 2018; Heng 2018; Lam 2018). As such, use of the goods and services tax as the payment vehicle may result in an increased proportion of protest responses.

Maintenance fees. Another candidate payment vehicle is property maintenance fees, which go towards the upkeep of common property within housing estates. Examples of fees include Service and Conservancy Charges (S&CC) paid by residents in Singapore’s public housing and condominium maintenance fees paid by private housing residents.

Respondents may perceive maintenance fees to be a more targeted payment vehicle as compared to taxes. Unlike taxes, funds collected from maintenance fees are used primarily for the upkeep of the estate, such as the cleaning and landscaping of common areas, as well as the maintenance of lifts, plumbing systems, and waste disposal chutes. Hence, these fees are earmarked for specific purposes and use of the funds is more transparent as compared to taxes.

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Consequently, respondents may prefer the use of maintenance fees as compared to taxes as the payment vehicle.

However, there are several shortcomings to the use of maintenance charges. First, unlike taxes, maintenance charges are paid to the municipal or estate manager, while, the control of noise is regulated at the national level. Hence, respondents may not believe that the municipal authority or estate manager collecting the maintenance charge is able to affect changes to noise policy.

Second, the current level of maintenance charges may anchor the valuation of the respondent. Among the 80% of Singaporeans living in public housing, the current level of maintenance charge range from S$19.50 to S$95 per month (Baker 2018). As such, the use of maintenance charges as the payment vehicle may inadvertently cause respondents to compare the change in payment with their current payments. Since the current level of payment is not related to a respondent’s valuation of noise abatement measures, the anchor may result in inaccurate estimates of the marginal benefits of these measures.

Community funds. A third alternative for the payment vehicle is a compulsory contribution to a community fund. Contributions to community funds are used to fund improvements to public housing in Singapore. These upgrading programmes include the lift upgrading and the housing improvement programmes (HDB 2018b). In these programmes, residents are polled on whether they will like to upgrade the lifts and common facilities within their blocks. If more than 75% of a block’s residents vote in favour of the programme, the project is implemented and each household pays a portion of the cost of the project to the community fund. The remainder of the cost is subsidised by the government.

Adopting this payment vehicle for the purposes of the survey entails informing respondents that they will be contributing to a community fund which will then be used to implement noise abatement. Among the candidate payment vehicles, contribution to community funds appears to the most targeted, since the collected funds will only be used for the implementation of noise abatement measures.

Singapore residents are also familiar with the concept of contribution a community fund to improve the neighbourhood. The majority of the population live in public housing39 and upgrading programmes have been completed in more than 100,000 homes, with 139,400 more

39 _{Public housing in Singapore refers to apartments built by the Housing Development Board (HDB). These}

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homes currently undergoing upgrading (Au-Yong 2017). Hence, a substantial proportion of the population has first-hand experience with contributing to a community fund. Among residents living in private housing, three-quarters of residents live in condominiums (Statistics Singapore 2018a). Condominium residents contribute to a Management Corporation Strata Title fund which is used for upgrading activities within the condominium. Among the remaining population, most will have second-hand information from their extended family or friends.

Nonetheless, similar to maintenance charges, the structure of current policies may anchor the respondent’s perspectives of contribution to community funds as the payment vehicle for this survey. Upgrading programmes are subsidised by the government to reduce the burden on households. For example, subsidies for the home improvement programme range from 87.5% to 95% (HDB 2018a). This high level of existing subsidy may cause respondents to assume that the government will be subsidising the implementation of noise control measures, biasing the estimates of marginal benefits associated with these measures. For instance, if respondents assume that the government will be covering some of the costs of noise abatement, they may under-report their valuation of noise abatement.

In order to reduce the effects of anchoring, the payment vehicle can be a contribution to a community fund, without mentioning the parallels to the upgrading programmes. The survey questionnaire sought to dissociate the contributions from the subsidies provided by the government by not mentioning the upgrading programmes.

All three of these payment vehicles were pre-tested during the focus group discussions. Participants of the focus group discussions were also asked to discuss other possible payment vehicles. On balance, the contribution to community funds garnered most support among participants of the focus group discussions.