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Yesterday the government has just raised "back" the development tax ("the tax that developers have to pay to build a bigger new development on an existing site" TODAY,July 19th, 2007) from 50% to 70%. The news title on TODAY vividly described this announcement as "Sharing the spoils".

In the recent few month, the GDP growth rate was re-predicted as about 2% more. The jobless population has reached the lowest level of the past five years and the salary level raised up to 20%. Consumption is continuously increasing. Well, naturally, the living expenses raise up,too. It reflects not only on the private property rent and purchase cost, but also on the commercial properties. However, the flouring real estate market is not considered as a bubble. It is believed that the real value is just not reached. It could be a good time for the government to raise the tax because of the booming economy and the buoyant market, when less complains would come over.

According to the news article on TODAY, an URA spokesperson said the move was "timely", and that the previous 50% development charge was "inadequate" in achieving an equitable sharing of the land appreciation value between the Government and the owner. It is obvious that the Government won't lose the chance to share the spoil but the reaction speed to the economic environment is indeed surprising and efficient.

The stock market was shocked and winded out by the announcement and resulted in a fell of the most in three month. The Straits Times Index fell 1.8%. CapitaLand dropped 2.6% and DBS declined 0.9%. (I thought this was reasonable for a normal fluctuation. @_@) However, it has been seen that the construction sector got the serious hit. Several of the companies tumbled 8.7%-11% in a day.

Anyway, the increased cost will be distributed to end buyers someday...for sure...