Member of Parliament Foo Mee Har has mooted the need to consider introducing wealth taxes and bringing back the once-removed estate duty as a better way to raise revenue to deal with rising expenditures such as healthcare costs.
She said this in her speech at the 2020 Budget debate in Parliament on Thursday (Feb. 27), not as a move to substitute the impending Goods and Services Tax hike, but on the contrary, to ease the burden placed on the Net Investment Returns Contribution (NIRC).
Large expenditures require higher revenues
Foo acknowledged that Heng's budget announced many economic support measures to help out companies, such as a S$4 billion Stabilisation and Support Package, as well as the S$6 billion set aside to offset the impact of the future 2 per cent hike in the GST.
"Whilst he has assured us that GST will not increase for at least another two years and has also provided support in the form of the GST Assurance Package, but you know, some Singaporeans are still wondering why? Why we would need to raise GST at all, given the apparent budget surpluses and additional capacity of S$6 billion in GST offsets?
Increases in cost of living is foremost in the minds of many people, particularly retirees."
She praised the Budget as "rock-solid" in the current uncertain global outlook, but also pointed out that we are growing increasingly dependent on the NIRC.
She said that although the wealthy in Singapore are already contributing through Singapore's progressive Income Tax system, property tax and the Additional Buyer's Stamp Duty (ABSD), more measures should also be considered.
Introducing wealth taxes doesn't mean wealthy individuals will go elsewhere
Singapore's estate duty was abolished in 2008, with the aim of making Singapore a leading wealth management centre.
Foo noted that some may feel that re-introducing the estate duty might harm this status, and encourage wealth and business owners to engage in complex moves to avoid these taxes.
But she also pointed out that income and wealth inequality are global issues that governments around the world are looking to address.
She added that transparency in ownership and value of assets is fast becoming the norm, such as automatic information exchange under the Common Reporting Standard, and other requirements to disclose beneficial ownership.
If tax rates in Singapore are kept simple and fair, with other countries also looking to impose similar taxes, the wealthy might still find it worthwhile to maintain their assets in Singapore.
Singapore has other advantages beyond low taxes
Foo also highlighted Singapore's other advantages, such as the rule of law and stability, that will grant wealthy individuals peace of mind even if wealth taxes are introduced.
She compared Singapore to Hong Kong, another leading financial and wealth management centre, being disrupted by protests and long-term uncertainties over its tax and legal systems.
Foo stated that introducing such taxes will not only raise revenues for Singapore, but also help to build a fairer and more equal society.
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Top image via Foo Mee Har's Facebook page