![]() ![]() ![]() The policy measure had no impact on resale transactions, i.e. The intention was to stimulate demand for new residential development. Buyers could defer the payment of the stamp duty – 3% of the home price – until the property was completed (typically three to four years from the launch of the project) or sold, whichever was sooner. In the wake of the Asian Financial Crisis in the late 1990s, the Singapore government gave a stamp duty concession to homebuyers in uncompleted new condominium projects. These are usually referred to as pre-sale transactions, as opposite to resale transactions that pertain to buying and selling of completed (and often used) condominium units. In Singapore, developers can sell their condominium before completion. In a recent paper, we analyse the change in stamp duty policy in Singapore in 2006 (see Fu et al. ![]() While there are noticeable differences between real estate and financial markets, the effect of stamp duty on real estate markets can shed light on the possible effects of a transactions tax on financial markets. For example, many Asian countries have used stamp duty to ‘cool down’ property markets. The application of transaction taxes goes beyond the trading of financial instruments. However, it is unclear whether this increased volatility is due to the withdrawal of informed traders. Studies that report statistically-significant evidence generally find Tobin’s tax to be associated with increased volatility (Umlauf 1993, Jones and Seguin 1997, Hau 2006, Pomeranets and Weaver 2011). On the other hand, Subrahmanyam (1998) and Amihud and Mendelson (2003) show theoretically that a financial transaction tax could reduce the amount of informed trading and harm market quality.Įmpirical evidence on the market-stabilising effect of Tobin’s tax is not conclusive. Stiglitz 1989, Summers and Summers 1989). By curtailing noise trading, Tobin’s taxes can reduce excess volatility (e.g. Recent work in behavioural finance demonstrates that uninformed short-term trading may drive prices away from fundamentals and raise price volatility. The proposal is being implemented by 11 EU member states, whereas other member states do not share the belief that the tax is beneficial.Įconomists are also divided on the stabilising effect of raising financial transaction costs, often referred to as Tobin’s tax. In September 2011, the European Commission proposed a harmonised Financial Transaction Tax for the EU, for the purpose of stabilising financial markets and raising additional tax revenue from financial institutions. The idea has been extended to all forms of financial transactions. Tobin (1978) proposed the tax more than 40 years ago, to “throw some sand in the wheels of speculation”, specifically for currency trading. Such trading is often blamed for causing excess volatility in financial markets. Steve continues to energetically promote this agenda.The Global Financial Crisis revived the idea of using transaction taxes to discourage short-term speculative trades. Key to his platform were a flat tax, medical savings accounts, a new Social Security system for working Americans, parental choice of schools for their children, term limits and a strong national defense. In both 19, Steve campaigned vigorously for the Republican nomination for the Presidency. Steel Corporation to the financial journalist whose economic forecasts for the coming year proved most accurate. Steve writes editorials for each issue of Forbes under the heading of “Fact and Comment.” A widely respected economic prognosticator, he is the only writer to have won the highly prestigious Crystal Owl Award four times. Steve’s latest book is Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity co-authored by Elizabeth Ames (McGraw-Hill Professional). ![]() The film was inspired by the book he co-authored, Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It. Steve helped create the recently released and highly acclaimed public television documentary, In Money We Trust?, which was produced under the auspices of Maryland Public television. Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers, politicians and pioneers in business and economics in honest conversations meant to challenge traditional conventions as well as featuring Steve’s signature views on the intersection of society, economic and policy. Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. ![]()
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