THERE may be readers who recalled a column I wrote last December headlined: "Deferred payment scheme: Averting a crisis".
In the commentary, I had noted that in a climate of uncertainty when even big banks could be rocked by a crisis of confidence, the guessing game played by analysts could easily spread fear among investors.
By coincidence within a week or two after my commentary, the Government released a breakdown of the homebuyers on the deferred payment scheme.
The figure turned out to be smaller than the ball-park figures bandied by some analysts. It reassured jittery investors and helped to defuse a potential crisis which might have been sparked off over the impact which defaulting property buyers might have on the market
After I wrote an article on a possible change to the tax laws to make it clearer to property-owning individuals over tax treatments on property sales gains, the volume of write-ups put out by analysts had been staggering.
I had stressed in the report, and again in a blog where I reproduced the Finance Ministry’s reply to my queries in full, that there is basically no change in the Government’s policy.
For those who sell more than one property within a four-year period, Iras will determine whether their gains should be taxed, based on the facts and circumstances surrounding their sales, "no different from the present tax treatment".
But analysts read the proposed change in a different light. One analyst wrote that the proposed change was to curb any excessive speculation in the market and there might be downward pressure on prices and volumes, especially on new property launches.
Others went further, giving a blow-by-blow breakdown on the property developers which might be hit by the proposed change.
Not surprisingly, the stock market suffered a seizure, and property counters took a hit.
But as a UBS analyst pointed out, it would be surprising if the Government were to slip in a major change in the tax code in such a stealthy manner, and one that looked even more draconian than the anti-speculation introduced in 1996 and subsequently scrapped five years later.
It is good that the MOF came out quickly to clear the air over the proposed change by stating categorically that there is no change to the current and long-standing income tax treatment for individuals who sell properties frequently.
And this is important: MOF also gave an assurance that there is no need for individuals to report to Iras every time they sell a property, if the change is implemented.
But I suppose that since the proposal had stirred up a storm, it is bound to generate a lot of feedback from the public before the consultation ends next Tuesday.
But that is the nature of public consultation – to get as much feedback as possible before any policy is implemented. It is good to find that a lively debate has been stirred up over the proposed tax change.