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Singapore signals any wealth taxes must fit progressive system

·3-min read
Financial center skyscraper buildings in the Marina Bay area of Singapore seen a cloudy sunset. Most of these skyscrapers are offices to large international banks.
Singapore’s finance minister said any form of wealth tax should fit into the nation’s progressive tax system, stressing that discussions on such a move are premature. (PHOTO: Getty Commercial)

By Philip J. Heijmans

(Bloomberg) — Singapore’s finance minister said Monday that any form of wealth tax should fit into the nation’s progressive tax system, stressing that discussions on such a move are premature amid a recent debate over inequality and revenues.

The overall tax system should be “fair and progressive, that those with the means are able to pay more,” Finance Minister Lawrence Wong told Bloomberg Television’s Haslinda Amin when asked about a possible wealth tax. “And I think in that context, any form of wealth tax will fit into that broader system.”

While Wong said the finance ministry considers all revenue options, he declined to provide details on what might be under consideration, saying “you are asking me questions about what I might say in the budget, which might be a bit premature.” Budget plans are typically announced in February.

Governments globally are struggling with rising inequality amid the pandemic’s uneven impact on livelihoods. In Singapore, a rich and small city-state with a large foreign population, issues of wealth taxes have been woven into a broader political debate over immigration and the widening wealth gap.

In February, Deputy Prime Minister Heng Swee Keat said in answers to parliamentary questions that there was scope to review Singapore’s wealth-related taxes, but highlighted the need to stay competitive. In July, Monetary Authority of Singapore Managing Director Ravi Menon raised eyebrows when he suggested that the city-state may need a property gains tax or an inheritance tax to address inequality, a speech that generated multiple commentaries in local media on the need and impact of wealth taxes.

Wong, who’s co-chair of the multi-ministry Covid-19 task force, reiterated Monday that fresh restrictions announced late last week are giving the city-state time to bolster its health care system to cope with rising daily cases, which hit a record of nearly 2,000 on Sunday.

Singapore Returns to Work-From-Home as Covid Cases Surge

Singapore tightened some measures around work, school and social activities to slow the surge and avoid a hard lockdown. The government also announced S$650 million in new aid to cushion the impact on workers and businesses from the new measures.

Other highlights from the interview include:

  • The government will not hesitate to “use the full measure of our fiscal power including our reserves should the need arise,” Wong said, when asked if past reserves would need to tapped again for pandemic aid.

  • GDP growth this year of 6-7% remains “achievable” despite the new measures, and if that’s what happens, Singapore “should live within our means as much as possible.”

  • Singapore remains committed to reopening its economy and society progressively, “but our aim has always been to do this without putting too much stress on our hospital system,” he said. “We are going all out to stabilise our health care protocols and augment our health care capacity.

  • City-state is in discussions with other countries about expanding vaccinated travel lanes, possibly this year, once it continues with its reopening plans.

© 2021 Bloomberg L.P.

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