I'm a 12th-grade student doing a school research paper evaluating the effectiveness of the recent increase in Additional Buyers Stamp Duty in the Singapore Housing market. This tax is directly imposed by the government on the consumer after the purchase of housing has been made. So will this have a demand-side effect (I know this isn't really applicable because it's macroeconomics, but contractionary fiscal policy like increasing income tax decreases Consumption and is responsible for a leftward shift in Aggregate Demand) like income taxes? Or will it have the conventional leftward shift in Supply curve (but I'm not sure how this is the case as there is no tax incidence on the producer)? Any help would be great, Thanks!
In microeconomics you can analyze tax incidence on supply demand graph. If you levy tax on consumers this will shift demand curve to the right.
However, this does not mean that whole tax burden rests with consumers. The tax drives a wedge between the price that consumers pays and the price that consumers receive. The whole tax burden is the triangle ABC and you can see that this triangle is split in half by original price. The upper half that cuts into consumer surplus is the tax incidence on consumers and lower half tax incidence on producers.
The tax incidence depends on elasticity of supply and demand. The more inelastic demand relative to supply the more tax burden is shifted to consumer and the more inelastic supply the more tax burden is shifted to producers.
I am not familiar with Singapore’s real estate market but usually the housing market is thought to have elastic demand and relatively inelastic supply so the tax incidence should fall more on suppliers.
Now to your macro question. First of all tax on a single market should not even had any macroeconomic impact in general. When we talk about increasing taxes in macroeconomic classes we usually mean that across whole economy for example increasing VAT that affects all markets.
But let’s for now suppose in Singapore housing market is such a great share of GDP that taxes there have macroeconomic impact. Well this would first in short run shift aggregate demand to the left to new equilibrium with lower prices and GDP but in a long run the equilibrium GDP will be determined by long run supply curve of the economy. As firms adjust to the new prices GDP will go eventually back to the same level but at lower overall price level.
Here is the example of macroeconomic effects of aggregate demand shifts. In the picture demand shifts due to decrease in investment but taxes would work the same way.