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Bank of America sees Singapore delaying wealth taxes this year

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The Singapore Budget, to be released Feb. 18, will be closely watched for details on bolstering government revenues, including a rise in GST.  (PHOTO: Getty Commercial)
Singapore is unlikely to include specific plans on anticipated wealth taxes in its upcoming budget, according to Bank of America. (PHOTO: Getty Commercial)

By Low De Wei

(Bloomberg) —Singapore is unlikely to include specific plans on anticipated wealth taxes in its upcoming budget, according to Bank of America Corp., which sees future steps targeting physical assets and inter-generational transfers rather than financial assets.

The city-state’s budget, to be released Feb. 18, will be closely watched for details on bolstering government revenues, including a rise in the Goods and Services Tax, after two years of pandemic-fighting government spending.

“Given the early stage of the review and the risk of over-tightening the fiscal stance with multiple tax hikes, we do not expect any concrete wealth taxes,” Mohamed Faiz Nagutha, a Singapore-based economist, wrote in a research note Wednesday.

Possible future wealth-related measures include making current property and vehicle taxes more progressive or introducing an estate duty or inheritance taxes, “given the ease with which financial assets can be moved to other jurisdictions,” he wrote.

As for the expected increase in the GST to 9% from 7%, a July start is possible, similar to previous increases, according to the report. However, “risks are skewed” toward delaying until later in the year or early 2023 given rising inflation and buoyant revenues.

Bank of America also upgraded its growth outlook for gross domestic product, on factors including strong vaccine coverage and health care capacity, which lowers the risk of a sharp tightening of virus measures, and rising domestic demand as the labor market recovers.

The bank now sees GDP this year growing 5.2%, from 4.2% previously, and 3% next year, from 2.7%.

© 2022 Bloomberg L.P.

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