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The hard truth of implementing wealth tax in Singapore

In an interview with John Micklethwait, the editor-in-chief of Bloomberg News, PM Lee said that “efforts to ease inequalities through wealth taxes face challenges including ensuring fairness and risks to the city-state’s competitiveness.”

He further cited that “we need to find a system of taxation which is progressive and which people will accept as fair.”

What is obvious is that “people” here refers to wealthy individuals and Lee will need to get their consent before implementing these “wealth taxes”.

So who are these “people” and why must he gets their consent first?

Singapore Context:

Singapore is known as the playground for the rich and famous as our government is inclined to roll out the red carpet to welcome these individuals, more specifically, their wealth.

But if “wealth taxes” can be seen as a form of a small “entrance fee” in exchange of lower tax and security, and if Singapore is still more superior than other countries in terms of its comparative advantages, then this should not be an issue as most wealthy individuals will gladly pay such a tax to safeguard the value and security of their wealth.

Domestically, we also have many wealthy individuals, some from the “old rich” and many newer ones who have gained their wealth from politics since some of our politicians are known to be paid in millions and also hold several lucrative directorship representations and benefited from rise in value of their landed properties.

For the “old rich”, most of them are quite patriotic and wise, knowing well that if the wealth-divide and income-disparity are to be allowed to grow out of control, then they too will be vulnerable to any socio-economic shocks when hardships drive the nation into chaos and helplessness.

But the newer ones, like some retired politicians and their families may not be so forthcoming in sharing their newly-acquired wealth and may “lobby” against Lee.

In truth, they will be no match if Lee is adamant about introducing such taxes.

Problem is, what if there are some “arrangements” that allow these politicians some “tax-free” exemption/s, and if so, can the government still claw back these exemptions without burdening our tax-payers?

But these, if valid, are still small issues that will not keep Lee awake at night.

The Real “Problem Child” In Introducing Wealth Taxes:

There is also another class of individuals that have acquired new wealth – the 4G politicians, senior civil servants and senior executives in our GLCs and other government-link entities such as GIC and Temasek.

Unless Lee introduces some new legislation to remove their remunerations as “state secrets”, then IRAS will not be able to calculate and tax these group of individuals.

For Lee, this group may be what he is referring to when he cited “difficulties in introducing wealth taxes” and rightly so.

Think about it.

For any of the proposed wealth taxes to be implemented equitably and with transparency, no one can be exempted from such taxes.

That will mean that all such politicians, executives and public servants will no longer be able to hide their wealth by citing “state secret” as an excuse.

As such, the real problem in implementing wealth taxes lies with the need to be upfront and transparent, but the use of “state secrets” to prevent full disclosure is the real “problem child”.

This means that they will now have to declare their wealth, including any remuneration-in-kinds that have “material impact” on taxation, such as shares, options, gifts, goodwill benefits, company-paid endowments and special benefits etc.

That will also mean that all public servants and politicians will have to accept public scrutiny of all their personal wealth, remunerations and income, starting with Lee having to lead by example in showing the way forward for the rest of his team to follow.

Here lies the real challenges.

Political Consequences:

Will Singaporeans still be kind and rooting for Tharman Shanmuaratnam for the office of Prime Minister should they finally get to know how much he has been drawing all these years?

Will Singaporeans still be kind to Ho Ching, the wife of Lee and Chairman-designated for Temasek, should they find out how much her total remuneration is actually costing the nation?

How will some of the PAP politicians defend the lucrative remunerations of their spouses and children who are helming or holding senior positions in government-link agencies and entities?

The Hard Truth is that for Lee to even be serious about implementing wealth taxes in Singapore, he will first need to address all these internal consequences.

So Lee was right and honest in sharing that it is “not so easy”.

Incentivizing Real Political Changes:

The easy way out for Lee will be to cite “challenges” and be contented with status quo – by continuing to impose more tax-increases on the working class of Singaporeans, as they have the least resistance to any tax or cost increases, in order to grow our economy and reserve with a trade sulpus.

In a weird way, it seems that our present governmental-system has a way in encouraging politicians to take the easy way out of any problems.

So how will Lee be addressing these “internal challenges” and what can we expect?

Lee’s Key Governing Prority:

The key challenge for Lee actually depends on where his key priority lies when it comes to governing the country.

If it is “with the people”, then he will know exactly what to do “for the people”.

But if his key priority is with his party or their political agenda and personal ambitions, then it is not going to be easy.

By saying that implementing wealth taxes is “not so easy”, could Lee be telling fellow Singaporeans that we ought to be realistic and not expect him to upset the interests of the new political elites?

If so, then the working class and retirees got to accept the Hard Fact that more tax & cost increases will be coming our way and that we ought to be grateful for the occasional handouts.

But can we blame Lee for sticking to staus quo by taking the easy way out and putting the full burden of tax on us?

The answer is obviously “no” as a large segment of Singaporeans has given him the mandate to keep to status quo, election after election, instead of encouraging him to change for the better.

Think about it – unless the PAP loses their parliamentary majority at the next election, there is no real incentive for Lee or his successor to change.

So instead of burdening Lee with more of such trivial questions, Singaporeans ought to be asking ourselves what do we really want.

If we want real change for a better Singapore, then why aren’t we using our votes wisely to encourage and support deserving parliamentarians during past general elections, and incentivize them to put the interests of fellow Singaporeans ahead of their party’s agenda or other self-interests?

Until we have sufficient parliamentarians to stand up for the interests of fellow Singaporeans, we cannot expect Lee or his successor to fight against the power of the new political class in Singapore, can we?
So let us start by taking our votes more seriously at the next general election if we still aspire for a more equitable society and bring the new political class of elites into order.

In the interim, there is really no point in talking about any wealth tax or asking Lee if he still believes that Singaporeans deserve better…

 

Joseph Nathan

 

 

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READER COMMENTS BELOW

18 Responses to “The hard truth of implementing wealth tax in Singapore”

  • Harder Truths:

    The wealth of the Regime will never be taxed. Maybe they will call their salary and other perks a ‘service to the nation’ payment or something. It does not matter. They will hide it somehow. It may take 100 million man-hours to uncover, so it is not possible.

    There will be more and more income tax increases plus all the other wonderful backdoor charges like ERP, Utilities, HDB etc. Now they will introduce Carbon Tax – you can bet on it.

    Also get ready for breathing tax and sunlight tax. For fat people there will be a glutton tax. For stupid people there is an I.Q. tax (most $G will automatically qualify).

    They will bleed the last drop of blood from your body and suck your bones dry just to make sure you have given everything.

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  • opposition dude:

    Change is already here in the form of 2 opposition controlled GRCs with more to come in future. PAP knows their good life is coming to an end sooner or later since people now do not hold them in such high regard and do not trust them so much unlike previously. Their 4G has been shown to be inept and clueless and has brought embarrassment to the party so we shall see just when one of these clowns becomes PM.

    Once PAP no longer call the shots is when the fun will really start. Will we see the monkeys do a Najib and attempt to leave the country one after another? And how would the new government do a thorough investigation into whether they have been corrupt what with the so called Swiss bank accounts and all that?

    Plenty of secrets to be exposed once PAP loses power!

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  • Trust only myself:

    The article is well written and the content known to smart people but of no use as our education system produced generations of stupid guys and goons………..

    Said many times before how can the goons expect the liars to introduce wealth taxes when the liars and their families will have to pay, not forgetting millions in pay not enough.

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  • John Doe:

    Throughout the last almost 24 months of covid sweeping mercilessly on SGpns who were told incessantly by the PAP Administration to cooperate fully observant of restrictions, cooperate with whatever DORSCON measures (??)(WHICH HAS LARGELY DISAPPEARED BCZ IT CANNOT WITHSTAND their own lies to implement it), and SGpns miserable livelihoods become even more miserable – has ALL the PAP individuals and collectively MADE ANY MEANINGFUL SACRIFICES to SG as a society (not even mention it as a state bcz the PAP abhors SG to function as a sovereign state), say just be first in Q to take vax for eg. much less we don’t even brooch about them volunteer to CUT THEIR SALARIES.

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  • French history:

    During the French revolution, the royalty and elite enjoyed Palace life;balls,garden parties and a decadent life style ,queen antoinette when told people has no bread said why don’t they eat cake,

    Such is the gap and out touch that the divide was so obvious,we see similarities today ,we hear of rooms representing each season in sentosa cove,
    I wonder how our elite n ministers can swallow their food n sleep well at nite,
    There are homeless sporeans ,sporeans who don’t have money to eat decent meal,shame shame,
    Now unvax will pay own medical bills,I am not against vat, am not surprised many of the unvax are of lower income,they hv enough troubles of their own
    Imagine elderly poor not well educated unvax and destitute ,will they be asked to pay for their medical bills?..

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  • KNN - Ai Hum Lah:

    The moment wealth tax is introduced people can calculate how many hum they have. Now, how many hum they have is a closely guarded secret. Do you think they want to expose and hum themselves?

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  • shit happens:

    When the old man passed on, inheritance tax suddenly vanished.

    You know much he got for his old man legacy?

    You asking ownself tax ownself?

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  • illiterate pap voters:

    opposition dude:
    Change is already here in the form of 2 opposition controlled GRCs with more to come in future. PAP knows their good life is coming to an end sooner or later since people now do not hold them in such high regard and do not trust them so much unlike previously. Their 4G has been shown to be inept and clueless and has brought embarrassment to the party so we shall see just when one of these clowns becomes PM.

    Once PAP no longer call the shots is when the fun will really start. Will we see the monkeys do a Najib and attempt to leave the country one after another? And how would the new government do a thorough investigation into whether they have been corrupt what with the so called Swiss bank accounts and all that?

    Plenty of secrets to be exposed once PAP loses power!

    Very well said, bro.

    Agree 100%.

    One more thing. When a pap voter turns against pap, it is permanent. Meaning, the turning does not turn back ever again.

    Of course, it takes a long, long time for the turning to happen. But if enough push exists, then the mandate of heaven takes place.

    pap PA paid IBs ask us how come we are so adamant that there is regime change in Singapore. We tell them. The main reason is the S$m pa which pap dishes out to its clan members. This thieving action has attracted the den of baddies into its fold. pap clan now is well known as the sure way to wealth. As with all things human, such a clan always never ceases to attract the baddies. PERIOD.

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  • RICH RICHER,POOR POORER:

    MANY COUNTRIES HAVE WEALTH TAXES,AND THE SO CALLED ESTATE DUTIES
    THIS IS TO LEVEL DOWN THE INQUEALITY OF THE SUPER RICH AND THE POOR.
    WHY PAP GAGMT DONT WANT THE WEALTH TAXES,THE ANSWER MAYBE THEIR ARE SO MANY
    CRONIES, and RICH BUSINESSMEN AMONG THEIR MEMBERS ARE SUPER RICH.
    CABINET MINISTERS AFTER 10 YRS EASILY ACCUMULATE MORE THAN $12M IN SALARIES.
    BUT THE POOR,AND COMMON PEOPLE ARE TO BEAR THE BRUNT OF MORE LEVIES,TAXES,
    ERP, CARPARK ,SCHOOL,KINDERGARDEN FEES INCESSANT,ELECTRICAL AND WATER TARIFFS RISING INCREASES,
    MEDISHIELD PREMIUMS EVER RISING ENABLING THE PAP GAGMT TO ACCUMULATED SEVERAL BILLIONS EXCESS EACH YR,EVER RISING MEDICAL INSURANCE RIDER COSTS BENEFITTING INSURANCE COMPANIES ,EVER RISING MEDICAL COSTS ETC,ETC.
    WHEN OIL WAS DOWN VERY MUCH, NO LOWERING OF ELECTRICAL TARIFFS, BUT OIL RISES IMMEDIATELY RISE ELECTRICAL TARIFFS VERY HIGH.
    BY JACKING UP THE RENTALS OF SHOPS IN HDB AND SHOPS AT SHOPPING MALLS WHERE MANY ARE OWNED BY GAGMT SUBSIDIARIES TO RACK IN MORE PROFITS AND PASS THE COSTS TO CONSUMERS FURTHER RISE UP THE INCESSANT RISE IN COSTS OF LIVING, IN THE WORLD HIGHEST COSTS OF LIVING CITY IN THE WORLD.
    NEXT ON LINE IN FUTURE EXPECT U TO PAY EXTRA FOR DISPOSAL OF RUSTBISH,..WHICH IS ALREADY PAID FOR BY CONSERVATIVE MTHLY CHARGES
    THE GREED NEVER STOP……

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  • oxygen:

    THE DAYS OF PAPpypolitics is clearly OVER. Maybe PAPpynomics population recycling economics too. I know these are BIG BOLD ASSERTION of my propositions/judgment calls but not without compelling reasons.

    Just look at realities emerging – the world has reached agreement on a minimum of corporate tax rate of 16%. It can’t go lower but those in higher tax bracket risks hollowing out of their economy as corporate moves domicile to lower tax haven regime. BUT THE PROBLEM IS THIS – corporate and sovereigns have NEVER BEEN SO HEAVILY IN DEBT than pre-pandemic -THEY HAVE TO MINIMISE TAX RATE AND INCREASING PRICES (to which peasants globally have to pay higher GST) to recoup cash flow and redeem their excessive debt borrowings.

    Like corporate, sovereign govt dug into their treasury or extended their debt loading – these has to be returned to bond/lenders. THEY HAVE TO TAX MORE as income from peasants dwindled and GST rises faster.

    Where to tax more when corporates are bone dry and peasants selling their backsides and nobody except the rich can buy?

    Everyone is shrinking their tax liability on income. So govt is forced to tax on ASSET (wealth tax) which put the lid on asset bubbles because nobody wants to pay higher prices on asset (particularly property) of “market-assessed”. There will be capital gain tax on the rich – the power base of PAPpypolitics all stupidly dreaming of million dollar HDB flats which in law is not even their property (but merely “tenant” in the title document).

    Smarter investors knows that asset bubble is cynical tool of political cows extracting value BY REGRESSIVE TAX STRUCTURE. Buyers of condo pays development tax and higher monthly mortgage repayment instalments to bankers (which earns more and get taxed via the corporate tax route.

    Foreigners will learn fast enough of WFH income after tax minimisation. They resigned from jobs in high-tax regime and WFH in lower tax regime, paying lower tax and sometime evade (legally) capital gain tax which Asian economies does not have. Skills and labor services will flee to lower tax regimes.

    I predict PAPpynomics population recycling economics will thrive, throwing more and more voters on to the waste heaps – the middle class get vaporised to nothing. Since the pandemics, 300,000 foreigners have left LEE-jiapore for varied reasons. It is a warning that a fake economy of burning the candle on both end won’t last because cost of living pressures is too much to sustain.
    IT WILL BE WORST FOR THOSE NATIVES WHO HAVEN’T ESCAPE AND NOW CANNOT ESCAPE a place of

    - underemployment of PMETS ESCALATION

    - runaway costs of living pressure set to escalate further in price/COL pressures.

    Those trapped inside will learn the hard ways of PAPpynomic fiction of “asset enhancement politics” is really GOONDU ECONOMICS THAT CAN’T LAST and asset bubbles is exactly that – TAXED INDIRECTLY AND FAR MORE TO COME.

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  • Temusik Patriot:

    Removing “death” tax when wife in a “COMA” TELLs ALL there is to KNOW about taxing the Rich, LeeGaly Corrupted n Famouse…

    Remove The Lies & LEEgaly Corrupt n tax the Rich accordingly n wealth will be evenly SPREAD

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  • opposition dude:

    illiterate pap voters: Very well said, bro.

    Agree 100%.

    One more thing. When a pap voter turns against pap, it is permanent. Meaning, the turning does not turn back ever again.

    Of course, it takes a long, long time for the turning to happen. But if enough push exists, then the mandate of heaven takes place.

    pap PA paid IBs ask us how come we are so adamant that there is regime change in Singapore. We tell them. The main reason is the S$m pa which pap dishes out to its clan members. This thieving action has attracted the den of baddies into its fold. pap clan now is well known as the sure way to wealth. As with all things human, such a clan always never ceases to attract the baddies. PERIOD.

    As I have mentioned previously, the majority of voters do not care much for what happens online. But what is beginning to change is the numbers voting for opposition, Sengkang being an excellent example.

    The majority of kiasees have to be convinced that more opposition voted in does not mean Singapore is gone case which the PAP loved to scare them with previously. PAP isn’t mentioning much about this these days because they know they are inept so it’s better to just keep quiet about it. Why give people more ammunition to shoot you with right?

    So as long as the kiasees see that having more opposition voted in does not cause the country to go bye bye then it will be easier to get more of them to vote for opposition. I was amazed at PSP’s West Coast result but it showed that the kiasees are willing to vote for opposition if they are able to convince them which Dr Tan almost did. Therefore it will not be a surprise should PSP win West Coast next time.

    And like you said above, turning takes a long long time to happen which I completely agree so what we are seeing is baby steps on the way to having more opposition voted in. Have faith fellow Singaporean bro, we are slowly making our way towards, at least, a coalition government!

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  • Freeloaders of a Higher Order:

    Joe, you’ve laid out Emperor Pinky’s political cards on the national platform… apparently, his inner motivations are reeking with the stench of Fascism:
    The Dynasty’s Leegalism is used to overwhelm the masses of cpf sheeples while absolution$$$ are vouchsafed for his elitist class of generals and mandarins (yes… incl. Indians and Malay politixians….it don’t matter once you’re sworn into the Pappy Lodge). They will make use of you – brains & brawn – while they fix you up with leegalism for eventual abuse as and when required.

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  • xoxo:

    First start with TAXING THE HIGH INCOME MORE!
    G$T INCREASES TO PLUG $100Billion is simply not equitable when peasant-citizens received a short-changed sum of $600 when announced GRANT PER CAPITA was $23.5K?
    Tax tho$e who receive more especially the high-income earner$.

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  • NotMyProblem:

    PAP will not change, that’s a given!

    Only change we can make is the voters, when the 61% reduces to less than 50%, Singaporeans will see changes.

    But with 40% of the population consists of new citizens, I reckon it will be very difficult to out vote the new citizens. All new citizens are of voting age, whereas not all the 60% Singaporeans are eligible to vote!

    With PAP’s incompetency exposed by Covid-19, I hope more Singaporeans would vote wisely the next GE.

    As the next GE will be in 3 years time, PAP is desperately importing more foreigners to be citizen now, in time for the next GE.

    When Singaporeans remain stupid and ball-less, PAP will still be in power.

    God bless the 39%.

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  • Not so easy buddy..... hehehe:

    Me & Wifey sharing the same bed of interests in the twin sovereign wealth funds of Singapore….huh?

    This 20-year Pappy incongruency should be explosive news for common citizens, once its mystic meanderings between “private” & “public” interests are uncovered and exposed. Ahgong will, indeed he must, leap out from some astral plane to plug the bursting geysers of decades long misgovernance and wilful appropriations.

    Why do you think all properly educated leaders in government all over the world will never partake in such scandalous enterprises. Perhaps because they will ultimately lead one down into the hells of perdition – guns & roses notwithstanding?

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  • Block All Exits:

    Once the PAP is out of power, the first thing the public should do is to organize and go to all the exits such as Causeway, Tuas , beaches such as Pasir Ris etc , Changi and Seletar Airports as well as our all seaports to arrest all those corrupted PAP members and their supporters and family members from escaping from Singapore.

    All these people have to pay for their crimes that they had committed against the citizens of Singapore. No two way about it.

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  • Observer:

    We need to ask what kind of wealth we want to encourage.

    Are these financial portfolio wealth invested in helping Singaporean companies expand into global markets,

    Or are these foreign businessmen from low-labor-cost countries coming to cannibalize the domestic Singapore market?

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