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Singapore may simply impose more taxes in its quest for more inclusive growth, its next prime minister, Lawrence Wong, said Monday in an interview with Bloomberg News editor John Micklethwait.
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Southeast Asia’s monetary center, which attracts the wealthy thanks to its low tax rates and modern infrastructure, is already making plans to raise taxes on the income sources of its wealthiest residents, as well as taxes on luxury homes and luxury cars.
Wong, who is also finance minister and deputy prime minister of the city-state, said the government wants to do more to tackle wealth inequality as core inflation hits a 14-year high.
Still, it’s a great balancing act. Taxing the wealthy can make the city less competitive compared to other nations looking to attract smarter skills and assets and can be detrimental to Singapore’s burgeoning wealth-controlling sector.
Here are five features the government might consider.
Recover inheritance or inheritance tax
Singapore abolished its so-called inheritance tax (taxes levied on wealth left after a person’s death) in 2008. Finance Minister Tharman Shanmugaratnam said the move would inspire Asia’s wealthy to move their assets into the country.
Since then, the city-state has noticed a boom in personal banking, family circle offices and asset management, making the reintroduction of the tax heavier.
It is also a difficult tax to assess, sometimes requiring valuations of assets that are difficult to value, such as art. for wealthy families in moderation.
wealth tax
A technique that is gaining popularity in some countries, Singapore would possibly look to reap some of the bargain profits such as inventory sales and real estate speculation. the United Kingdom imposed an exceptional tax on the profits of oil and fuel companies.
Capital gains taxes are also less difficult to assess because they regularly involve the promotion of an asset at a fixed price.
But Singapore has long avoided taxing maximum dividends, as well as the investment source of income and capital gains, aware that those rights are among the least appreciated by investors and can make the city-state less competitive compared to Hong Kong’s rival. center.
A wealth tax
Wealth taxes (annual or one-time tasks for the super-rich based on a percentage of their total asset price) have risen and fallen in popularity around the world, driven by ideology, blatant inequality, or economically impoverished governments.
But wealth taxes suffer all the above drawbacks in terms of valuation and collection, and even if a Singapore legislator were to possibly recommend enforcing such an obligation, it would threaten to encourage wealthy citizens to move their wealth elsewhere.
Philanthropy
Lately, the city-state provides some of Asia’s most generous tax incentives for philanthropy; at least 80% of a charity’s budget must be spent in the country.
Reducing those benefits can lead to an accumulation of taxes paid to the government. But it can also decrease the amount channeled to local charities. Philanthropy advocates and establishments have already lobbied the government to establish regulations that allow greater freedom to donate abroad.
More of the same: income, goods and cars
A more likely path for the government is to simply double the taxes it already has, with the option of making many of them more progressive, taxing higher-income or higher-priced assets at higher rates.
Singapore already announced more taxes on real estate and cars in its annual budget earlier this year, and imposed more taxes on stamps last year to cool the property market.
It already imposes higher fees on those who own more than one property. Potential new targets may come with super-luxury parts like yachts and personal jets, but the simplest way to tax is to simply raise the rate for more expensive purchases. .
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