Workers' Party chairman Sylvia Lim said on Tuesday that while she acknowledged the move towards a more progressive tax system, there is room for more to be done.
She said that a progressive tax system would reduce cost pressures in other areas and send an important psychological signal that the nation believes in the "stronger helping the weaker", said Ms Lim (Aljunied GRC), who was the first opposition MP to speak in the Budget debate.
She laid out several proposals including tweaking the income tax tiers. Currently, the highest tier of income tax charges 20 per cent for taxable income exceeding $320,000, noted Ms Lim. However, she said there is scope for more differentiation at the top as this threshold captures many professions, from university professors to top bankers.
She suggested having more income tax levels for top earners, ranging from 20 per cent for those earning $320,000 to $500,000 to 25 per cent for those earning above $1 million. These levels are still competitive compared to other countries while Singapore has other incentives for high earners such as its low corporate tax rates, she said.
While this year's Budget goes some way towards introducing more progressive taxes on luxury cars and properties, Ms Lim said retirees who may have bought properties in good locations many years ago should not be unfairly penalised. She also highlighted a "loophole" in the property tax measures where the wealthy could buy many mid-range properties and pay less tax.
Ms Lim also cited a study of 54 countries by University of Virginia psychologist Shigehiro Oishi which drew a link between higher progressivity in tax systems and greater subjective well-being of citizens. The study ranked Singapore in the lower half of tax progressivity while Singaporeans' life satisfaction ranked lower than several other developed countries.
She ended her speech without indicating whether she supported or opposed the Budget.