Higher buyer's stamp duty could boost Government coffers by $411m
The higher Buyer's Stamp Duty introduced in this year's Budget is unlikely to put a dent in any aspiring upgrader's dreams, observers said, but it will mean more for the government coffers to pay for rising expenditure in areas like healthcare and infrastructure.
Finance Minister Heng Swee Keat said on Monday that the top marginal buyer's stamp duty rate on the portion of value or price of a home in excess of $1 million would be raised from 3 per cent to 4 per cent. The hike took effect yesterday.
JLL national research director Ong Teck Hui said that based on last year's transactions, the extra duties collected would have been around $200 million.
Going forward, Cushman & Wakefield research head Christine Li estimates that with higher expected transaction values and land acquisitions, an extra $411 million could be raised.
She said the higher stamp duty would not derail the recovering private property market, which rebounded in the second half of last year after three years of decline.
While two-thirds of properties transacted last year were above $1 million, observers said most of the extra revenue will come from the sale of "ultra-luxurious" properties above $5 million, whose buyers have the ability to meet "marginal" increases of $40,000 and upwards in stamp duty.
A spokesman for developer CDL said: "We believe discerning buyers will see the strong potential of property investment in Singapore compared with other global cities like Hong Kong, where prices have increased significantly."
Even those eyeing properties at the other end of the scale are unlikely to be deterred.
Colliers International research head Tricia Song noted that the median transaction value of non-landed private homes was around $1.2 million last year, which would mean about $2,000 extra in taxes - not significant enough to put buyers off a purchase.
Ms Li said the cut-off at $1 million strikes a balance, noting: "If the cut-off is too high or too low, you might not generate the right amount of tax revenue, or you may affect most of the population.
"And if you increase the margin to 5 per cent, it may destabilise a residential market that has only just embarked on its recovery."
Political scientist Derek da Cunha said the new rates help to address the issue of income and wealth inequality.
"Those with the means pay more in taxes, which are then eventually redistributed through subsidised programmes to those lower in the pyramid," he said, noting that the top 10 per cent includes Singaporeans and foreigners.