Consider wealth and inheritance taxes on ultra high net worth individuals as a possible source of revenue in future, MP Cheryl Chan (Fengshan) said yesterday.
These would be an additional source of funds to sustain the many social welfare programmes that may have "a long tail in the years ahead", and help the country maintain fiscal prudence, she said on the second day of debate on the Budget statement.
In a speech delving into inequality and ways to achieve a more equitable distribution of resources, Ms Chan said Singapore has done well, with a system built on meritocracy, a fair and progressive tax system, and a redistribution of wealth focusing on social outcomes.
But in the last 10 years, evidence shows the rise in wealth inequality has been greater than in income inequality, she noted. "Those with wealth are not only on a better footing to accumulate more, they have even better access to resources that help preserve their wealth."
To reduce the wealth inequality gap, Singapore has taxes on personal income, property and consumption, so the top earners and those with more assets contribute to the national coffers, she noted.
But while Singapore has a low personal income tax rate compared with other countries, it is impractical to consider further taxes on income, owing to the shrinking and ageing workforce.
"After all, the ability of an average income worker to build wealth is dependent on sheer labour. Also, the consumption tax in one way or other does impact the lower-income group to meet their basic living expenses," Ms Chan said.
She proposed looking into wealth and inheritance taxes for ultra high net worth individuals or the top 1 to 2 per cent of society.
"In the spirit of giving and sharing, will the ultra high net worth individuals be willing to share more of their wealth to uplift the vulnerable and less privileged communities?" Ms Chan asked rhetorically.
There have been similar calls for such a tax in other countries.
Ms Chan also called for a "decent living wage" for lower-income workers, especially those with young families, so they need not live hand to mouth. Central to the issue is how much consumers and employers are willing to pay to meet this living wage, she said.
"This comes back to the need for sharing. The top and middle tiers of the economy... have more opportunities and pathway to elevate. They can certainly do more for the lower-income group, starting with a willingness to pay more for their services," she added.
Ms Chan said talk about inequality in Singapore will be "chatter", unless people acknowledge that "we must all play a part and take actions in our daily lives to make Singapore an inclusive country".
"Without building our social capital now, defining the values and roles of this country with active civic participation, each Budget will only fall on the ears of citizens like a lecture in class and endless debate of whose rightful duty it is to care for the ageing population and the future generations."