With the upcoming Budget 2022 sparking policy debates over the most appropriate form of taxes, I hope that the Government will consider wealth taxes. This would help ensure that inequality does not become a runaway problem (Budget 2022: Wealth taxes likely to address inequality, property taxes easiest to implement, Feb 12).
While consumption taxes such as the goods and services tax (GST) help to increase the Government's coffers, they affect lower-income families more in relative terms, as they consume a greater percentage of these families' income compared with higher-income families.
Granting more GST rebates and vouchers to lower-income groups may mitigate the effect on them, but any form of means testing will inevitably exclude some people in need who do not meet the criteria for aid, such as low-wage migrant workers and foreign spouses.
With it being reported that the number of good class bungalows sold last year tripled from 2019, as well as that an increasing number of high-net-worth individuals are choosing to relocate to Singapore, it is high time to rethink the country's wealth tax regime.
While wealth taxes are relatively hard to implement effectively, they could still be calibrated in a way that makes wealthy individuals unable to exploit loopholes.
For example, a capital gains tax on luxury residential properties or a deemed rental income tax on unoccupied residential property would be easier to enforce than a tax on the entire net worth of an individual.
The buying and selling of cryptocurrency has gained much traction as well, with numerous newly minted "crypto millionaires". Therefore, implementing a capital gains tax on cryptocurrency assets may be something to consider as well.
Maintaining fiscal sustainability should be of utmost importance to Singapore.
Wealth taxes, which discourage the concentration of resources and mitigate growing inequality, represent a potent tool to generate broader benefits for our society. It should not be ignored any longer.
Eileen Isabel Ang