CHANGES IN DUTIES

I now turn to stamp duties and customs duties.

Stamp Duty Exemption for Transactions in Non-Singapore Dollar Stocks or Shares

In spite of the recent turbulence in stock markets globally, the capital market will continue to grow in importance as an alternative to the traditional bank loan as a source of funds for companies. To remain competitive as a financial centre for the region, we must establish quickly the depth and sophistication of Singapore's capital market.

One of the more important ingredients of a successful capital market is an active and liquid secondary market for the trading of securities. In order to facilitate the development of a liquid securities market, an incentive scheme was introduced last year which extended the 10% concessionary tax rate to cover income from non-Singapore dollar securities transactions of Asian Currency Units (ACUs) and approved securities companies. This was aimed at encouraging international securities houses to base their operations here.

This year, I intend to take one step further in this direction. Presently, stamp duty is levied at the rate of $1 for every $1,000 or part thereof on contract notes issued or received in Singapore for transactions in stocks or shares. To facilitate the trading of non-Singapore dollar stocks or shares here, I have decided to exempt, with immediate effect, the contract note duty on transactions in such stocks or shares by an ACU or approved securities company in the following situations:

(a) when the transactions are with persons outside Singapore, or with other ACUs or approved securities companies;

(b) when the transactions are on behalf of persons outside Singapore.

This will put Singapore more in line with other major financial centres like New York, which does not levy any stamp duty on stocks or share transactions, and Hong Kong, which does not impose contract note duty on transactions in foreign stocks or shares. It can also be seen as further Government encouragement and support of private sector initiative, which has led to a trading linkage being formed last year between the Stock Exchange of Singapore and the US National Association of Securities Dealers to facilitate the trading of US stocks here, and an agreement between our Stock Exchange and the Luxembourg Stock Exchange to have joint listings for Eurobonds.

Stamp Duty for Assignment of Leases

At present, the stamp duty on a lease agreement, other than an agreement for the lease of immovable property, is subject to a maximum of $500. However, when the interest in such a lease agreement is assigned to another party, stamp duty is levied on the transfer document on the basis of the value of the interest assigned, without any ceiling. I have decided to introduce a $500 ceiling on the stamp duty payable on such a transfer document with effect from 1st April 1988. This will bring it in line with the stamp duty on a lease agreement. The estimated loss of revenue is $100,000 a year.

Import Duty on Refrigerators and Quota Restrictions on Airconditioners

I now come to customs duties. We believe in and practise a policy of free and fair trade. As part of our commitment to even greater trade liberalisation, the Government has decided to remove the import duty on refrigerators, ranging from $184 per unit to $368 per unit, with effect from 1st April 1988. The revenue loss is estimated at $10 million a year. From the same date, the quotas on imported airconditioners will also be lifted.

Duty on Cigarettes

The present import and excise duties on cigarettes are $70 per kilogram and $34 per kilogram respectively. As part of the continuing national effort to discourage smoking, I have decided to increase the import duty on cigarettes by $5 per kilogram to $75 per kilogram. The excise duty on cigarettes will also be increased by $2 per kilogram to $36 per kilogram. With your permission, Sir, may I table Appendix II (Cols. 649 - 650) showing the details of the increases. These increases will take effect from today. The yield in revenue is estimated at $12 million. Appendix II - DUTIES ON CIGARETTES AND TOBACCO (Cols. 649 - 650)