STAMP (AMENDMENT) BILL

Order for Second Reading read.

2.44 p.m.

The Parliamentary Secretary to the Minister for Finance (Mr Tang See Chim) (for the Minister for Finance): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Members will recollect that in the Budget Speech the Minister for Finance mentioned that the rates of stamp duty for a number of items, most of which have not been revised since the 1930s, would be revised to bring them in line with the present value of money and to suit present day conditions. From the revenue angle, the most important item of stamp duty is on conveyances on property, accounting for 40 per cent of the stamp revenue during 1966. The existing rate is $2 for every $100 or part thereof. It is proposed to base the duty on a sliding scale. Where the value of the property is up to $30,000, there will be no change in the existing rate and, as such, purchasers of Housing and Development Board flats or other low-cost houses will not have to pay higher stamp fees. Where the value of the property is above $30,000, and not more than $50,000, there will be an increase of 50 cents for every $100 or part thereof on the value of the property exceeding $30,000. In respect of property exceeding $50,000, there will be an increase of $1 for every $100 or part thereof on the value of property exceeding $50,000. It is quite reasonable that purchasers of property of higher value pay more.

At present the rate of duty on the transfer of shares and stocks is 15 cents for every $100 or part thereof where the name of the transferee is filled prior to the execution of the transfer, in other cases, the rate is 20 cents for every $100 or part thereof. It is proposed to increase the stamp duty to 20 cents and 30 cents respectively.

The present fee of 10 cents per share certificate will be increased to $1 for every $1,000 or part thereof of the par value in respect of new share certificates. This revised rate will also apply to certificates issued in respect of bonus and rights issues. The higher fee is justified because, in subsequent transactions, very often shares change hands without registration, resulting in a loss of revenue. At the same time, the existing flat rate of 50 cents on a contract note will be replaced by an ad valorem duty. A duty of $1 for every $1,000 of the value of the shares and stocks will be payable.

The stamp duty on cheques will be raised from 10 cents to 15 cents and on receipts from six cents to 10 cents.

Apart from these, there are small increases in the rate of stamp duties on mortgages, leases, insurance, appraisements, etc.

There is, however, no increase in the duties on 15 items. These consist of the following five items for which there has been no increase in the rates since 1935.

(i) bonds on superannuation annuity - the rate is 25 cents for every $100;

(ii) bonds of any other kind whatsoever - the rate is $5;

(iii) apprenticeship deed - the rate is $1;

(iv) policy of sea insurance, where the premium does not exceed $1 - the rate is five cents; and

(v) life insurance policy for every $1,000 insured - the rate is 10 cents per $1,000 or part thereof.

The first two items affect people in the lower income group and item (iii) affects students who wish to learn a trade. In the case of item (iv) , if a higher duty is charged, it may divert business to other countries as the policy of sea insurance could be taken elsewhere. In the case of life insurance policy, the rate is not increased because there is an automatic increase in the amount of stamp duty payable with the larger value of life policies being taken now.

The ten items for which the rates have not been increased since 1952 are as follows:

(i) affidavits and statutory declarations - $2;

(ii) bonds on letters of administration where the estate does not exceed $10,000 - $2;

(iii) power or letter of attorney for appointing a proxy or where the value of a property is below $1,000 - $1;

(iv) any instrument certified or endorsed by a public notary - $2;

(v) reconveyancing of mortgaged properties and securities:

(a) where the amount of monies secured does not exceed $1,000 - $1;

(b) where the amount of monies secured is between $1,000 and $10,000 - $3;

In any other case, the rate is $10;

(vi) declaration of any trust or instrument chargeable with duty on a settlement - $10;

(vii) appointment of a trustee - $10;

(viii) duplicate of any instrument chargeable with duty - $2;

(ix) protest of bill or note made by a public notary attesting the dishonour of a bill of exchange or promissory note - $1; and

(x) revocation of any trust of any property other than a will - $10.

The specific rates of duties affect generally people in the lower income group. Affidavits and statutory declarations are required by people for purposes of identity cards, birth certificates and for admission of children to schools, etc. In the case of bonds on letters of administration, the specific duty is only applicable for release of estates of less than $10,000. This will affect families with small means. Power or letter of attorney appointing a proxy to vote at a meeting is a very small item of revenue.

In the case of the other items, the present rates are reasonable, considering that the parties affected would have to pay duties on the other instruments connected with the transactions.

Members will note that where the items affect people in the lower income group, the duties will remain unaltered and, at such, the revision of stamp duties will only affect people who can afford the small increases in the rates.

Clause 2 of the Bill seeks to amend section 36 (1) of the Stamp Ordinance by increasing the flat fee for adjudication from $1 to $25 to cover the cost of services performed by the Commissioner of Stamps. In addition, it is proposed to introduce a fee where the value of the property has to be certified by .1 Government valuer. This fee will be based on the difference between the amount declared by the applicant and the amount certified by the Government valuer as follows:

(a) a fee of one per cent will be charged on the first difference of $10,000;

(b) a fee of half per cent will be charged on the next difference of $90,000.

Where the difference is in excess of $100,000, the rate of duty will be one-quarter per cent. This measure is necessary to circumvent and discourage under-valuation by applicants.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. -[Mr Tang See Chim].

Bill considered in Committee; reported without amendment; read a Third time and passed.