ESTATE DUTY (AMENDMENT) BILL

Order for Second Reading read. 4.33 p.m.

Mr Hon Sui Sen: Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The purpose of this Bill is to give legislative effect to the estate duty concession that was announced in the 1981 Budget Statement. Clause 2 of the Bill amends section 10C of the Estate Duty Act so as to raise the existing exemption ceiling for dwelling houses from $200,000 to $600,000. The concession was effective from 1st January 1981.

Sir, I beg to move.

Question proposed.

Dr Augustine Tan: Sir, those who own private residential property worth $600,000 or more would certainly be grateful to the Hon. Minister for this concession. However, the great majority of Singaporeans can only afford HDB and HUDC flats, the current values of which are far short of $600,000 despite the price increase of HDB and HUDC flats. This raises the question of equity in the administration of Estate Duty. It would be more equitable to treat all estates alike. I would suggest that the exemption from estate duty of $600,000 be applied to all estates, provided a dwelling unit is part of such estates.

Mr Ng Kah Ting: Sir, I rise to speak in full support of this Bill which, when passed, will increase the relief from estate duty payable in respect of dwelling houses from $200,000 of the aggregate value of the deceased's interest value therein to $600,000. This increase will apply in respect of persons dying on or after 1st January, 1981.

Sir, I must congratulate the Hon. Finance Minister for his pragmatism and foresight. It is a well-known fact that the prices of housing property today have increased by leaps and bounds. Surely we would like to continue to encourage home ownership and not see a family displaced from its owner-occupied residential property, the value of which may exceed $600,000 at today's market price on the untimely demise of the owner.

Here, I would like to suggest to the Hon. Minister that, after all, in keeping with the encouragement of the home ownership scheme, surely it will not cost the State coffers too much if we could exempt one owner-occupied residential property from the liability of estate duty. I know, Sir, the Minister will shoot me down on this simply because there are owner-occupiers of residential properties whose values may be worth more than $1 million. It is also true to say that such owners number only a mere handful and if their property is worth more than $1 million, they will surely know how to get round it and avoid paying estate duty by dividing the property into a number of shares or through inter vivos, in which case it will only take effect after a five-year lapse.

What I mean really is to ask the Hon. Minister for consideration to be given to those who simply have one piece of owner-occupied residential property and do not want to dispose of it, bearing in mind that such owner-occupied property might have been bought years ago when property prices were much lower then. In this case they might be caught by this Bill despite the fact that this exemption limit has been raised to the quite generous figure of $600,000. Owners of single residential property with a market value well above the $600,000 mark may have no choice but to dispose of them now or, at best, hope not to die. If they have to dispose of such property for fear of imposing a financial burden on the family, then the pride of owning a residential property after having worked and slogged so hard in their lifetime just to have a roof over their heads will render it meaningless. It will not be good for them and Singapore as well for, coupled with the prospect of having to be displaced, the family will have to look for alternative accommodation. If I may point out, the likelihood of getting such accommodation, whether through purchase or rental is bleak; bleak in the sense that it is not easy under the circumstances existing today for each member of the family who qualifies for HDB flats will still have to wait accordingly.

I would like to cite an example in support of my appeal. I know of a case in my constituency where a family is affected by resettlement upon compulsory acquisition of land by Government. Before the acquisition can be finalized, the owner-occupier died intestate, rendering it imperative on his widow and eldest son to take up Letters of Administration to administer his estate which consisted of a house and land. After the residual effects of the estate were equally distributed among those who were entitled, the co-administrators, i.e. the son and his family, got a rude shock when they were told by the Resettlement Department of the Housing and Development Board that since his deceased father owned a house and that he had a share in it upon his father's demise, he was disqualified from applying for an HDB flat. I must add that in this case the beneficiaries were numerous and the residue due to each was a paltry sum. How about that? The Hon. Minister in reply may well say that a single swallow does not make a summer, but I still maintain that it is about time we changed the ground rules. Surely we can afford this change by allowing the family of the owner-occupier to keep the only residential property they have and not to impose any estate duty, even though it may well be above the exemption limit. This is to enable the beneficiaries to live peacefully and happily together in his (deceased) only property. Sir, when I said "his only property", I use the term "his" in the sense of a first person and in the legal context the masculine gender embraces the feminine gender.

If I may be audacious enough to ask of the Minister, "Please, give this matter much more serious thought", I think the Hon. Minister is a kind and generous man and he would consider my humble plea favourably. After all, let us not forget that the HDB does allow owners of HDB flats to sell their flats at a profit and then to register again for the purchase of another flat. Here, I am not, of course, suggesting the same in this case but it is true that many people have sold their HDB flats and obtained new flats. All these HDB flats up to now do not cost as much as $600,000 each. There is a parallel to this.

Simply put, if an owner-occupier of a single residential property runs the risk of having to pay estate duty and if he has no other estate in Singapore, the question is: How deep will their roots be? The Hon. Prime Minister has pointed out at a sitting of Parliament that we must take roots and he has likened it to the instant tree against the tree planted from the seed which has a tap-root.

Nevertheless, Sir, I would still like to appeal to the Hon. Minister to consider my point, maybe not this time if he does not think it opportune but certainly the next time as he has done so over the past few years when raising the exemption ceiling from $50,000 to $100,000, to $200,000, and now $600,000. I think he fully understands the purport of my intention as I am sure he is aware that there are many people who have struggled hard and through hard savings and thrift managed to buy such properties in earlier times. Surely, we do not want to see them, especially their families, lose their homes, hence, the tap-root.

Mr Hon Sui Sen: Sir, again in this particular case, the Bill is to implement the concession that was given in the 1981 Budget. At that time I think the limit of $600,000 was considered adequate to cover most owner-occupied properties up to the level of semi-detached houses. It certainly covers all HDB housing and some HUDC and Government flat units, I think many terrace houses come within the $600,000 limit and semi-detached housing too, and maybe some detached housing in the less select residential areas. I still think $600,000 is a good limit but I will take note of the suggestions which have been made by the hon. Members, and if they represent the views of a large part of the electorate, then perhaps at the appropriate time, i.e. at the next budget, it may be possible to consider extending this concession.

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 Hon Sui Sen].

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