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SINGAPORE – There is scope to further review Singapore’s wealth taxes, but the imposition of such levies will not replace the need to increase the goods and services tax (GST), Deputy Prime Minister Heng Swee Keat said on Friday (26 February).
Responding to questions from MPs about the intensification of wealth taxes, Heng said such taxes are not new to Singapore and that the country has improved the progressivity of wealth-related taxes over the years.
During the budget statement discussion on Wednesday, Ms Foo Mee Har (West Coast GRC) highlighted how the wealth tax trend is gaining traction globally and cited Argentina’s single tax on millionaires in December 2020.
Several other countries, including the UK, have also highlighted wealth tax, he said.
In response, Heng noted that Argentina’s one-time tax was made to fund increased spending for Covid-19 measures.
But Singapore entered the pandemic with a strong fiscal position and is fortunate to be able to tap into its past reserves, he said.
Adding that he believes Ms Foo’s intention is for those who emerged from the crisis to do more for the community, Heng said Singapore will continue to review its wealth taxes.
In response to the suggestion by Workers’ Party MP Leon Perera (Aljunied GRC) to increase the buyer’s stamp duty and additional buyer’s stamp duty (ABSD) for more expensive properties, Heng agreed that the taxes Property related have a role and the Government will continue to review this to ensure it remains progressive.
He stressed that ABSD is a measure of the real estate market, rather than revenue collection, and is calibrated to maintain a stable and sustainable real estate market.
Noting that property tax and stamp duty were made more progressive in the 2010, 2013 and 2018 budgets, Heng added: “I am confident that Mr. Perera will provide his strong support if and when we make these new moves.” .
Other options have also been considered as alternatives to the GST, including the estate tax, he said. But this was abolished in 2008, because the middle and upper middle income groups were disproportionately affected compared to the wealthy, who were able to avoid the estate tax through tax planning.
Heng reiterated that the country taxes wealth and has been raising taxes on wealth over the years. But the question is not about taxing wealth, but how to design wealth tax movements to ensure they are effective.
Singapore should ensure that the wealth tax cannot be easily avoided, strikes a balance between progressiveness and competitiveness, and contributes to the resilience and adequacy of the country’s income, he said.
Addressing WP MP Louis Chua’s (Sengkang GRC) suggestions on spending the proceeds from land sales in the budget, Heng said selling Singapore’s land does not enrich the government and should not directly support its spending. Instead, investing the profits generates a sustainable long-term income stream and has served the country well, he added.
He also added that relying on the sale of land for tax revenue has its risks, given the volatility of land prices and because relying on the sale of land to finance spending could lead the government to have a vested interest in keeping high. land prices.
In places where local governments rely on land sales for income, distorting effects can be seen on the well-being of people in countries, Heng noted.
“The current approach of spending the proceeds from land sales through the NIRC (Net Return on Investment Contribution) avoids these pitfalls and allows the government to make land sale decisions based on what is best for the development of the country. , and not because I need to balance the budget. “
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