Forum: Why place tax burden on those who worked hard to accumulate wealth?

The Government has done a good job of closing the wealth gap (Time to consider a wealth tax for S'pore, Sept 14).

The Gini coefficient of distribution of wealth (not to be confused with distribution of income) for Singapore is actually lower than that for the average Scandinavian country.

The wealth Gini for Singapore was 0.757 in 2019. It was 0.867 for Sweden, 0.798 for Norway, 0.742 for Finland and 0.838 for Denmark.

All four are countries with high taxation and high welfare spending. Only Finland is slightly more equal than Singapore in terms of distribution of wealth.

The figures may surprise those who associate Nordic countries with being very equal societies.

The main reason for our relative equality in the distribution of wealth is Housing Board flats. Singapore's home ownership rate - at 88 per cent - is one of the highest in the world. The average for the Nordic four is 69 per cent.

What this means is that when the property markets go up, more Singaporeans benefit from an increase in wealth. Distribution of income is a different matter.

It is true that Singapore is more unequal than the Nordic countries in that regard.

The Government's policies have resulted in more wealth equality.

Our income taxes are low so people can save more if they are thrifty. There is no tax on interest earned from savings, so you are encouraged to save.

For many Singaporeans, the savings are invested in property. Citizens can use funds from their Central Provident Fund (CPF) account to pay for their property.

CPF funds attract above-market interest rates. And HDB flats are subsidised.

The authors in the commentary proposed revisiting a wealth tax to address the twin goals of fiscal sustainability and fairness.

To me, the whole concept of a wealth tax (which I take to mean property tax plus estate duty) is unfair and unjust.

People have already paid income tax. Savings are what is left after expenditure. The more you save and invest, the more wealth you accumulate.

So why should your beneficiaries be taxed when you die?

Imposing a wealth tax imposes a burden on the thrifty who slowly accumulated their wealth.

I think our Government should continue to keep spending low after the pandemic emergency needs are settled.

If spending must go up because of the ageing population, then let the tax burden be broad-based and not targeted at the frugal who saved and worked hard to accumulate their wealth.

Tan Keng Soon

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