OTHER TAX CHANGES

Property Tax Rebate

To help ease cost pressure on companies, I have decided to give a 15% rebate for commercial and industrial properties for the year commencing July 1998. The revenue loss to Government is estimated to be $145 million. HDB, JTC and other Government agencies owning properties will pass on most of this rebate to their tenants. The Government also strongly encourages landlords to do likewise, and pass on at least half of the rebate to their tenants. Property Tax Exemption for Land Under Development

Between 1986 and 1995, land under development was exempted from property tax. The exemption was introduced to help developers tide over the economic downturn during the recession years. It was subsequently withdrawn after the economy and the property market had shown strong recovery. In view of the current difficulties faced by the property sector, I have decided to reinstate the property tax exemption for land under development. The exemption will be for a period of up to 5 years, and will apply from the time construction begins to the time the Temporary Occupation Permit is granted. The exemption will take immediate effect. The estimated revenue loss from this measure is $200 million a year.

Stamp Duties

Currently, stamp duty is levied on a variety of instruments specified in the First Schedule of the Stamp Duties Act. In the

1996 Budget, stamp duty was abolished on 13 types of instruments. To further reduce costs and inconvenience to businesses and members of the public, stamp duty will be abolished on all instruments, except for those which relate to stock and shares, and immovable properties. The estimated revenue loss from these changes is $33 million. The changes will take effect from 28th February 1998. Details are set forth in Annex III (Cols. 573 - 576). Annex III - INSTRUMENTS WHERE STAMP DUTY IS ABOLISHED (Cols. 573 - 576)

Duties on Cigarettes

Duties on cigarettes were last increased in February 1993 to discourage smoking. In support of the national effort to discourage smoking, particularly among the younger population, the excise duty on cigarettes will be raised from $115 to $130 per kilogram. Details of the changes are in Annex IV (Cols. 577 - 580). The changes in duties is estimated to increase revenue by about $35 million a year, and will take effect from today. Annex IV (Cols. 577 - 580) Electronic Road Pricing and Vehicle Tax Rationalisation

The Ministry of Communications will be introducing the Electronic Road Pricing (ERP) system this year. It will commence on 1st April 1998 on the East Coast Parkway (ECP), and would be phased in to other parts of Singapore over the next two years. In conjunction with the introduction of the ERP, the vehicle tax structure will be rationalised and a package of road tax rebates will be given.

The changes in road tax structure and the road tax rebate package will result in a revenue loss of about $1 billion for the Government for the next 5 years. This revenue loss will be partly offset by ERP revenue and additional revenue from the release of more COEs over the next 3-5 years. Overall, the Government expects to achieve revenue neutrality for this exercise in about 8 years. Details of the ERP implementation plan, the road tax rebate package and the new vehicle tax structure will be announced by the Minister for Communications next week.