Think before you tax

Source : Today – 21 Jul 2009

I REFER to “Every transaction should be taxed” (July 20) in which Mr Gilbert Tan Hee Khian compared the high cost of condominium ownership in Singapore to that in Australia and Canada.

Mr Tan was invited to a property launch only to be told that all the units had already been sold. The following day, some of the properties were listed in the market for $100,000 more.

He viewed these speculators as the bane of the property market and a possible reason why some of our brightest, including expatriates, are leaving Singapore. To mitigate the problem, he suggested that the authorities introduce a capital gains tax.

I sympathise with Mr Tan’s frustration. However, I cannot agree with his suggestion to introduce a capital gains tax.

Such a tax will have disastrous consequences not just on the property market but also on the capital market.

It may well eliminate the competitive edge that has made Singapore a financial hub in the Asia-Pacific region.

I am sure there are targeted ways to curb property speculation which will not have a spill-over effect into other sectors of the economy.

One measure could be to stop launching properties before they are completed. Another could be taxing gains on properties that have been held for less than three years.

I urge the authorities to come up with measures to curb speculation but more importantly, to establish rules that are clear and transparent to all participants. These rules would stabilise the market and help Mr Tan and others like him to purchase properties at reasonable prices.