XN000022-1996-04-24 — Page 27

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The Bill covers two main proposals. First, to make the measure of charging stamp duty on agreements for sale of residential property permanent. And second, to charge a full cost recovery fee only in respect of the voluntary adjudication service.

Let me first deal with the stamp duty measure on sale of residential property. 1 will begin by setting out the background relating to the measure. As Members may recall, the measure first came into effect in January 1992 as one of a series of actions which aimed to curb speculation on residential property. The measure is temporary in nature and has to be extended from time to time. Its validity was first extended by this Council in December 1993 for two years until the end of 1995. In December last year, I moved a resolution in this Council, which Members approved, to extend the measure for a further two years until the end of 1997. In moving the resolution, I also made known that we intended to introduce an amendment to the Stamp Duty Ordinance within this session to make the measure permanent. The Bill before Members today seeks to implement this proposal. Now let me explain why the measure should be made permanent.

First, the measure has proved to be effective in helping to curb speculation on residential property. The property market has now stabilised and speculation has moderated. Making the measure permanent would provide a continuous disincentive to speculators, which is necessary notwithstanding changes in the market situation. This also demonstrates our long term commitment to tackle the problem of speculation in the residential property market.

Secondly, the measure is equitable because it can ensure that stamp duty would be charged on all residential property transactions, including intermediate ones. It also enables us to charge profits tax on profits gained from what essentially are trading transactions. From the taxation point of view, the measure should be made permanent.

Thirdly, I must also stress that whilst achieving the aim of tackling speculation and enhancing fairness in the taxation system, the measure does not affect genuine home buyers at all. They only have to pay stamp duty slightly earlier.

There are thus strong justifications for the measure to be made permanent. We cannot anticipate circumstances which would warrant the withdrawal of the measure at any time, whether on a long term or temporary basis. We therefore propose to amend the Stamp Duty Ordinance to make the measure permanent.