Forum: Modest wealth tax will make overall fiscal mix fairer

I refer to Dr Desmond Wai's letter, "Several technical issues involved in implementing wealth tax" (March 10).

Some argue that wealth taxes are difficult to implement, due to difficulties in pricing taxable assets. This concern is misplaced in modern economies, since the bulk of wealth held by high net worth households is in the form of publicly traded financial assets, for which valuations are readily available.

Indeed, the Organisation for Economic Cooperation and Development report Dr Wai cites concludes that there are "strong arguments for having a net wealth tax in the absence… of capital income taxes and… inheritance and gift taxes". Singapore has no taxes on capital gains, dividends or inheritance.

While the rich may evade such taxes, the Workers' Party's (WP) view is that we can create strong incentives for the well-to-do to contribute back to the society that they have benefited so much from, and in which they remain a part.

The fear that a wealth tax will lead the rich to focus on consumption, rather than investment, also holds little water, since consumption is just as likely to generate jobs and promote economic activity.

As Switzerland has shown, there are practical solutions to the challenges of implementing wealth taxes.

Wealth inequality is likely to be even greater than income inequality in Singapore, as Sengkang GRC MP Louis Chua explained in Parliament; many individuals have great wealth but little income and hence pay little or no income tax.

WP has proposed a modest wealth tax. We have argued that this would make our overall fiscal mix fairer and help reduce the need for a goods and services tax hike.

The text of my speech in Parliament is available here.

Jamus Lim

MP for Sengkang GRC

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