Reader's Letter Of The Day

From today's FT:

Sir,

Robert Zoellick (Heed the danger of asset bubbles*, November 25) mentions at least five ways being attempted in Singapore to dampen the property price bubble.

Strangely he does not suggest that it might be appropriate to increase the annual land value tax (currently 0.5 per cent of land market value) levied by the Inland Revenue Authority of Singapore. As head of the World Bank Group, should he not be suggesting that this type of tax be seriously considered internationally to inhibit property (ie land) price bubbles?

In Singapore, public infrastructure is funded by land value tax, which is a fair quid pro quo, since the value of land is directly related to infrastructure improvement.

Charles Bazlinton, Alresford, Hants.

* From the earlier article: "In Singapore, the 16 per cent surge in property prices during the third quarter of this year led the authorities to release more land for development and to take steps to stop borrowers from deferring payments. Other more focused measures include setting targets for the overall rate of growth of bank credit, imposing caps on the share of bank lending for real estate and portfolio investments, or higher capital requirements for riskier lenders.

In developed countries, where central banks want to keep rates low, regulators should be considering supplementary tools such as raising margin requirements on stock, bond and futures transactions, or raising down-payment requirements on commercial or speculative real estate deals."