$39.43 billion was collected in tax revenue for April to September 2021, up from $23.74 billion collected in the same period in FY20.
Singapore registered an increase in tax revenue for the period of April to September 2021, with stamp duties as well as personal and corporate income taxes driving the boost.
For April to September 2021, tax revenue stood at $39.43 billion, exceeding the $23.74 billion collected over the same period in FY2020, reported The Business Times (BT), citing data from the Accountant-General’s department, which is available online at the Singapore Department of Statistics.
The FY2021 figure also surpassed the $37.2 billion registered during the six month period in FY2012, before the COVID-19 pandemic outbreak.
With this, economists expect the overall Budget deficit for FY2021 to be smaller, as compared to the $11 billion projected by the government, as they expect the higher tax collections in certain areas to continue amid a recovering economy.
“We will continue to see strong contributions because the overall underlying activity continues to pick up,” said Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank, as quoted by BT.
Stamp duty collections, for instance, rose to $3.22 billion in FY2021, from $1.2 billion in 2020 and $2.08 billion in 2019, thanks to a flurry of activity within the private property sector.
The HDB resale market has also been active as home buyers turned to the resale market due to delays in the completion of Build-to-Order (BTO) projects.
“The private property market saw an increase of 22.6% in transactions in the first nine months of 2021, compared to the whole of 2020,” said Lee Sze Teck, Senior Director for Research at Huttons Asia, as quoted by BT.
“Even the private and HDB rental market in 2021 experienced similar levels of activity despite the tight border measures.”
He added that activity in the Good Class Bungalow (GCB) segment has also been flourishing, with more than $2.5 billion in deals recorded as of end-October.
Wong Xian Yang, Head of Research at Cushman & Wakefield, believes stamp duty collections for October and November would be higher, in view of the strong demand for private residential properties and the hike in prices.
However, the year-end festivities, as well as the upcoming Chinese New Year, may lead to an easing of activity in the private home market in December and January.
Meanwhile, corporate income tax collection for FY2021 jumped to $12.76 billion, from $5.69 billion in FY2020 and $12.5 billion in FY2019. Personal income tax collection for FY2021 also rose to $8.03 billion, from $6.93 billion in FY2020 and $7.03 billion in FY2019.
“It shows how uneven this recovery has been,” said Chua Hak Bin, Senior Economist at Maybank Kim Eng, as quoted by BT.
“This pandemic has hit low-wage workers disproportionately, whereas high-wage or high-skilled workers have not been hit as hard or … even (saw) a windfall.”
Varathan noted that the wage subsidy schemes and liquidity measures provided by the government to SMEs prevented unemployment and retrenchment from increasing, helping to bolster personal income taxes.
Analysts, however, pointed that while property taxes nearly quadrupled year-on-year to $1.98 billion in FY2021, this could be coming off a low base in FY2020, when the government offered a property tax rebate to support the economy during the pandemic’s early days.
“Given the recovering economy and progressive re-opening of Singapore’s economy, we could see an increase in property taxes, as both residential and non-residential rents – with the exception of retail – are largely expected to increase,” said Wong.
The higher-than-expected revenues to date are helpful in funding support measures as the city-state battles a surge in COVID-19 cases.
Looking ahead, Lee expects 2021 to be a banner year for the property market, with the number of deals reaching a new high since 2012 at more than 32,000.
He also expects the HDB resale market to register over 29,000 transactions, while private property prices may increase by 6% to 6.5% this year. Prices for HDB flats may also grow by over 11%, added Lee.
Property analysts also see the private property market slightly benefitting from the easing of travel restrictions and the return of foreign buyers.
Cushman & Wakefield noted that foreign buyers made up 4% of total private residential non-landed transactions during the first nine months of 2021.
The figures stood at 6% in 2019, with China, India, Indonesia, Malaysia and the United States accounting for 59% of total foreign demand for private non-landed homes, said Wong. Of those five markets, the city-state only has a vaccinated travel lane (VTL) with the US.
Huttons CEO Mark Yip believes that an expanded VTL scheme would benefit Singapore’s districts 9, 10, 15, 18 and 19.
“We may see more buying in the Core Central Region (CCR) once more VTLs or travel without restrictions are in place,” said Yip as quoted by BT. “If VTLs are set up for Asean countries, it would further boost transactions in the property market.”
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: email@example.com.