Second Reading Speech by Mr Tharman Shanmugaratnam, Minister for Finance, on the Stamp Duties (Amendment) Bill 2010

           Mr Speaker, Sir, I beg to move, “That the Bill now be read a second time”.

2.        On 19 February 2010, the Government introduced a package of measures to discourage property speculation and pre-empt the property market from over-heating. One of the measures was the re-introduction of a seller’s stamp duty on all residential properties and residential lands transferred on or after 20 February 2010, and disposed within one year of transfer. The seller’s stamp duty is levied at the same rates as the buyer’s stamp duty, as specified in the First Schedule of the Stamp Duties Act. The rates are 1% on the first $180,000 of consideration or market value whichever is higher, followed by 2% on the next $180,000, and 3% on the balance.

3.        Sir, the Government had previously amended the Stamp Duties Act to introduce a seller’s stamp duty in 1996 to cool down the over-heating property market then. The seller’s stamp duty was suspended in Nov 1997, and the relevant provisions in the Stamp Duties Act were subsequently repealed in 2005. To pre-empt the emergence of a bubble in the property market, we reintroduced the seller’s stamp duty from 20 February this year. The Stamp Duties (Amendment) Bill 2010 will give legislative effect to this reintroduction of the seller’s stamp duty.

4.        A seller’s stamp duty is part of the range of policy instruments that the Government may use from time to time to pre-empt or mitigate property market bubbles. However, the process of introducing and repealing provisions in the Stamp Duties Act each time we have to introduce, vary or remove a seller’s stamp duty is not efficient, especially when we have to respond in a timely and calibrated fashion to changes in the property market cycle.

5.        The Amendment Bill will therefore introduce general provisions on a seller’s stamp duty and allow the Government to introduce, vary or remove the seller’s stamp duty via a Ministerial Order.

6.        I shall run through the clauses of the Bill briefly –

7.        Clause 1 of the Bill deems the amendments to the Stamp Duties Act to come into operation on 20 February 2010, which is the date of implementation of the seller’s stamp duty.

8.        Clause 2 of the Bill introduces a new Section 22A in the Stamp Duties Act to charge the seller’s stamp duty on all transfers^[1] of prescribed immovable properties. Clause 2 further introduces a new Section 22B, which enables the Minister for Finance to bring Section 22A into force from time to time by an Order to be published in the Gazette. Section 22B (6) provides for the first such Order to bring into effect the seller’s stamp duty from 20 February 2010.

9.        The salient features of the Order will include –

1. The categories of properties that will be subject to the seller’s stamp duty;

2. The minimum holding period in order for the seller to be exempt from the duty; and

3. The date on or after which the property is acquired, that will subject the transferee to the duty if he subsequently disposes the property within the specified holding period.

10.        The amendments to the Stamp Duties Act will as I have mentioned provide Government with the policy flexibility to introduce future stamp duty changes where necessary in response to changing conditions in the property market. The Government however does not intend to change the seller’s stamp duty liberally. Any future change to the seller’s stamp duty will be a carefully considered decision, taking into all account all prevailing and projected factors at the time.

11.        Lastly, Clause 3 of the Bill makes consequential amendments to the Third Schedule of the Stamp Duties Act, which specifies the persons liable to pay the duty.

CONCLUSION

12.        Mr. Speaker, Sir, I beg to move.

^[1] Transfers include the contract for sale, gift, release, settlement, distribution on voluntary winding up of a private company, lease of a prescribed term, and exchange of a prescribed immovable property.