Property deals have brought in more than $1.7 billion in stamp duty in the first five months of this year, surpassing the $1.3 billion collected for the whole of last year, according to latest official figures.

And this is just 7.7 per cent short of the record of $1.8 billion that was collected in 1998 during the last property peak, according to a report in The Straits Times today.

At the rate the property market is moving, tax revenue could be boosted by $4 billion by year's end - maybe as much as $5 billion, if analysts' prediction that the market is only just picking up holds true.

Stamp duty is a tax on commercial and legal documents used in certain transactions. While stamp duty is a barometer of economic activity, It is largely derived from property purchase and ranges from 1 per cent to 3 per cent of the purchase price.

Thus, the recent jump in property transactions and prices has contributed much to the stamp duty takings. A recent adjustment to the stamp duty rules may also have had an effect.

Last December, the Government stopped allowing deferment of stamp duty payments on property sales, a practice that allowed payment to be pushed back for a few years. Apart from those who bought property before December, everyone else has to make payment within two weeks of agreeing to buy.

Hence, stamp duty figures for this year will come from deferred payments from past years, as well as all properties bought this year.

And this year, stamp duty looks likely to become the third biggest contributor to government operating revenue, say economists, when it used to be one of the smallest. It is projected to surpass customs and excise duties, motor vehicle taxes, property taxes and betting taxes.

Add to it the expected higher takings from income tax and the goods and services tax, and analysts predict that government revenue is likely to exceed the $32 billion collected last year.

For the full story, read The Straits Times