Sire, Can I have More (errr stamp duty?)

Hmm my lame Oliver Twist take on stamp duty raised for investors esp foreigners (except for those with specific FTA with Spore who are immune to the taxman’s outstretched hand).

Is it a good policy? Depends on whether you are being screwed of coz. If you are a local and buyer of your first or second property,  then it is all good still. Price might even drop 30% as some stakeholders in the property market are trying to scare the govt about a collapse. I don’t think it would collapse as there is still optimism, rental market potential and low interest rates to sustain purchases. Prices would only collapse 30% if there is a recession.

If you are a foreigner, and here “foreigner” means non-PR, wham bam 10% more stamp duty. So their total stamp duty is tiered up to 3% plus the additional 10%. If you are a PR, you are knocked, albeit less hard since the govt wants to root people somewhat with the blue IC, with the usual stamp duty plus 3% more under the new rules if you get your second property onwards. The bottom line, the govt is yet trying to curb demand for investment private property. Sporeans get hit, but not as hard as PR, and non-PR are worst smacked. The stamp duty discrimination is all tiered and rational. About time if you asked me, although some would argue that it is too little, too late.  BTW will anybody argue that foreigners are being discriminated and should have same “human rights” to invest in property as locals? LOL

Cynicism aside about when is discrimination ok and when it is not, should Sporeans looking to buy their second property also be pinched with an additional but lower stamp duty to correct the market better? The govt was trying to strike a balance and alienate as few voters as possible. Firstly, it would erode the govt’s public relations gesture to its voters that foreigners are the ones being discriminated against. Secondly, implicitly Sporeans should be given the leg up in getting investment property to rent out to the steady inflow of foreigners. Hence, that was the reason why only Sporeans buying their third and more property are singled out by the taxman. Whatever.

Anyway, remember that supply side checks were loaded since early last year with the Hong Kong-styled timing-tiered Seller’s Stamp Duty? Seller stamp duty was unheard of in recent times until 2010. The latest round of the seller stamp duty cudgel was swung this year before the GE, to slow down speculation in the private housing market and appease house-hunting voters (at the expense of house-selling voters) e.g. if seller held his property for less than a year, his seller stamp duty was 16% of price or market value whichever is higher.

Really, in the grand plan in my kopitiam economics, foreigners only account for 19% of private property purchase in second half of 2011. Yes the govt noticed the trend that in second half of 2010, that figure was 7%, and wants to slow down the property boom. Hence, the additional stamp duty is not going to crash the property market as it affects foreigners mainly, and any correction would be gradual. If fact, the govt is not doing enough if they want slow down foreigners gaming the property market.

From a xenophobic perspective and worried about foreigners destabilizing the property market and pricing out Sporeans, the additional stamp duty is encouraging, sure, but why no additional seller’s stamp duty on foreigners and PR? Now that would be a kick in the balls, placating Sporeans that the govt cares about Sporeans first. Heh.

Moving further, what about not allowing PR to buy HDB property? PR are still foreigners as they are technically not citizens and did not do NS, more or less depending on their age, sex, gender even, blablabla. So why should they be allowed to buy govt housing? However, pushing out PRs from the resale HDB market and increasing their demand for private property complicates the entire story about Sporeans not being able to afford private and HDB housing. Best looked into at another time. Heh.