By The Folks(guest contributor)
A letter from a certain Mr Zhuang Li-Hao was published in the Straits Times forum page recently. Mr Zhuang felt that existing policies curb transaction volumes, but are by themselves inflationary. This is why prices continue to rise despite the various rounds of cooling measures. He suggested two ways to modify current housing policies to stabilize housing prices and demand:
1. Replace Additional Buyer’s Stamp Duty (ABSD) and Seller’s Stamp Duty (SSD) with a capital gains tax
Mr Zhuang feels that both ABSD and SSD deter speculators, but directly increase the costs of ownership and transaction. And in a rising housing market, buyers and sellers will hold on to their positions. Sellers in particular, will build the ABSD and SDD into selling prices. As such, the number of transactions will drop as prices increase.
He proposed to replace ABSD and SSD with a capital gains tax …