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We need to tax ‘lazy wealth’

One of the highlights of the Bloomberg New Economy Gala, which was held in Singapore on 17 November 2021, was an interview given by our Prime Minister, Mr. Lee Hsien Loong to John Micklethwait, Editor-in-Chief of Bloomberg News. The entire crux of that interview was the fact that Mr. Lee made the point that it would not be easy to implement a wealth tax and that our tax system needed to be progressive and fair. More on the interview can be found at: [LINK]

Photo: Ministry of Communications and Information

For a nation that has spent the last two decades being all about “Attracting Wealth,” it was a something of a revolutionary step for our Prime Minister to even mention the topic of a “wealth tax” at a forum aimed at pleasing the international business community.

One has to ask what was going on and most likely answer was the fact that this was an idea brought up by Dr. Jamus Lim, Member of Parliament for Sengkang GRC. Around two weeks before the Prime Minister gave the interview with Bloomberg, Dr. Lim proposed imposing a wealth tax on the richest in Singapore. Whilst Dr. Lim may be a member of the opposition Worker’s Party, he is also a highly respected economist, having worked at both the World Bank and Abu Dhabi Investment Authority. So, it was impossible to tar Dr. Lim with the label of being a stary eyed socialist and the idea is now in open discussion. More of Dr. Lim’s proposal can be found at: [LINK]

I will leave the merits of a “wealth tax” to the more qualified. I will however, touch on the fact that Singapore has been a fairly unequal society and the problem we face is not so much a question of attracting wealth but the type of wealth we are attracting.

Whilst the government has tried its best to present Singapore as having a wonderful forward-looking economy based on innovation, the truth is much of the thinking behind Singapore’s economic structure remains stuck in the 1960s when it was essential to have a manufacturing base and our competitive edge was about being cheaper than the Western world (which Japan is included) and having a work force that would do as it was told. Our economy back then was based on the premise that we attracted rich outsiders who would give us the good things in life.

Whilst the industries have changed, the thought process behind our economic development remains the same. This line of thinking has been programmed into the governing DNA. Whatever you talk about, the official answer will always revert back to this line of thinking. Why must we have casinos? Because rich foreigners will gamble their money here and give us jobs? Why must you have an open-door immigration policy? Because you need the foreigners to create jobs for the locals. Why must you house construction workers in tight, cramped and unsanitary conditions? Because the heavy industry that employs most of us needs cheap labour to be competitive.

Nearly every pertinent question raised in the public sphere has been met with this line of thinking and the same goes for the issue of making the rich pay more tax. – Standard answer is that Singapore needs low taxes to make it attractive to the rich who will create a demand for all sorts of things which will create great things for the locals.

Whilst this line of argument has had its merits, particularly during the boom years of the 80s, one has to ask if its relevant today. If you look at the wealth that we’re attracting, you’ll find it is doing what the local wealth has been doing for years – plonking it into very expensive real estate. Whilst I am not against investing in property per se, but if you look at Singapore (and Hong Kong), most of national wealth is tied up in property rather than in the stuff that creates jobs.

If you look at the companies that make up the Straits Times Industrial Index, you’ll find that around a third of those companies are landlords. If you look at the Forbes list of richest Singaporeans, you’ll find that the “home-grown” are essentially landlords.

Again, there is nothing wrong with being a landlord from a business perspective. However, from the socio-political-macroeconomic perspective, something is very wrong if landlords have a disproportionate hold of things and get to dictate national policy as has been seen with the dormitory owners.

Think about it, Sir James Dyson’s biggest headline grabbing move was to buy an expensive piece of property in Singapore. This was hailed as “investment.” To be fair, Sir. James did move his headquarters to Singapore and there is a technology centre in Singapore, which will hopefully generate some of the “brain” work for the locals. Then, there is the example of Eduardo Saverin, a co-founder of Facebook who is famous for legal action against the main man at Facebook (Mark Zuckerberg). As well as buying property, Mr. Saverin has set up a venture capital fund. He has, however, done little in the way of skills transferring or getting involved in business himself.

So, what have our foreign investors actually done? What have our local billionaires actually done for us?

I’m not advocating a China style forced redistribution. However, what one should look at is making the tax system encourage genuine wealth creation rather than just making it easy for the world’s wealthy to plonk their money into stuff that doesn’t actually do much for the economy. This is where Mr. Lee and his team need to put on their thinking caps. Sure, we need to attract wealth but we need to see to it that wealth does not become lazy and goes into things that actually benefit the economy as a whole. If we need to “wealth tax” we should tax “lazy wealth.”

 

Tang Li

*Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.

 

 

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READER COMMENTS BELOW

11 Responses to “We need to tax ‘lazy wealth’”

  • xoxo:

    *Tax wealth*,wealth tax?
    Maybe,LEE will RAID ANOTHER $100 OR $200 BILLION from sgs’RESERVES to ENRICH THE WEALTHY?
    No worrie$ for the rich.
    $tock market goes up n up in a fearful COVID pandemic?!
    The WAY STOCK MARKET SHOT UP,IT DOES NOT LOOK *endemic*???

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  • oxygen:

    PAPpynomics ARE LOUSY ASSET BUILDERS, even worst as asset-traders. Can’t believe the walking dead of smiling ownself-cheque-ownself politics still loitering around the big end of town as if they are miracle “achievers”.

    Peasants are expected to be happy with no asset owned but instead living in the permanent life-long bondage slavery.

    Of course, there is no inheritance tax in this equatorial animal farm of 61% of inhabitants are grass-eating true sheep – many of them – fortunately – will be also be either deservingly living in poverty, if not near starvation post-pandemic wipe-out.

    The 300,000 foreigners who left our shores since the Covid-19 pandemic onset have left for greener pasture. How many will come back, if any?

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  • xoxo:

    JP Morgan Chase CEO Jamie Dimon calls CRYPTO CURRENCIE$ AS TOKENS.
    I wonder what he thinks of his bank share price?
    He says price rise of cryptos is HYSTERIA.
    What about STOCK PRICES like Chase’s?
    And,what about the BILLION$ banks like his and DBS make during a PANDEMIC?
    Not hysteria?

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  • xoxo:

    The US GOVT N OUR GOVT MAKE SURE THE RICH GETS RICHER,EVEN IN BAD TIMES LIKE A PANDEMIC?
    $ rules the world.
    $ talks,it really does.

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  • Kudos:

    https://www.ahajournals.org/doi/10.1161/circ.144.suppl_1.10712

    American Heart Association

    Abstract 10712: Mrna COVID Vaccines Dramatically Increase Endothelial Inflammatory Markers and ACS Risk as Measured by the PULS Cardiac Test: a Warning

    Steven R Gundry
    Originally published8 Nov 2021Circulation. 2021;144:A10712

    Abstract
    Our group has been using the PLUS Cardiac Test (GD Biosciences, Inc, Irvine, CA) a clinically validated measurement of multiple protein biomarkers which generates a score predicting the 5 yr risk (percentage chance) of a new Acute Coronary Syndrome (ACS). The score is based on changes from the norm of multiple protein biomarkers including IL-16, a proinflammatory cytokine, soluble Fas, an inducer of apoptosis, and Hepatocyte Growth Factor (HGF)which serves as a marker for chemotaxis of T-cells into epithelium and cardiac tissue, among other markers. Elevation above the norm increases the PULS score, while decreases below the norm lowers the PULS score.The score has been measured every 3-6 months in our patient population for 8 years. Recently, with the advent of the mRNA COVID 19 vaccines (vac) by Moderna and Pfizer, dramatic changes in the PULS score became apparent in most patients.This report summarizes those results. A total of 566 pts, aged 28 to 97, M:F ratio 1:1 seen in a preventive cardiology practice had a new PULS test drawn from 2 to 10 weeks following the 2nd COVID shot and was compared to the previous PULS score drawn 3 to 5 months previously pre- shot. Baseline IL-16 increased from 35=/-20 above the norm to 82 =/- 75 above the norm post-vac; sFas increased from 22+/- 15 above the norm to 46=/-24 above the norm post-vac; HGF increased from 42+/-12 above the norm to 86+/-31 above the norm post-vac. These changes resulted in an increase of the PULS score from 11% 5 yr ACS risk to 25% 5 yr ACS risk. At the time of this report, these changes persist for at least 2.5 months post second dose of vac.We conclude that the mRNA vacs dramatically increase inflammation on the endothelium and T cell infiltration of cardiac muscle and may account for the observations of increased thrombosis, cardiomyopathy, and other vascular events following vaccination.

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  • Harder Truths:

    Anyone here think any of us are going to see any of this ‘wealth tax’?
    You know where it will go right? Right.

    There is a big chance these foreigners who are super rich decide to pack up and leave. Then their investments leave with them. Jobs become scarcer. People end up unemployed because they thin taxing people will solve their problems.

    The USA and EU do not have wealth taxes. The UK does, and rich people have left in droves and taken their money with them. Learn from others’ mistakes, not from your own; this is the sign of a smart nation (which we are not).

    Life is not so simple as economists paint them to be. 99% of economists are liberal and advocate higher and higher taxes to support more and more socialist spending – the kind that ruins all socialist states. \

    You think the money grabbing will end with the wealth tax? Once the super rich are gone, who do you think is next in line?

    Know the consequences first. Play stupid games, win stupid prizes.

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  • Spineless Sinkie Syndrome:

    Aiyah… No need to talk so much HYPOCRISY & BS about taxing the rich.

    Firstly, ask the LEEgime why they purposely REMOVED ESTATE TAX back in 2008 (so “well-planned” hor, BEFORE Lau LEE getting ready to kick his bucket? LOL)

    https://www.iras.gov.sg/taxes/other-taxes/estate-duty/estate-duty

    If LEEgime did not remove estate duties back then, anytime Lau LEE kaput, then famiLEE would need to disclose ALL their BILLIONS (incl. corporate & property holdings and be severely taxed mah. LOL.

    Now, AFTER they ESCAPE TAX for their own famiLEE, then they talk about TAX for the rest? LOL.

    If want to tax wealth, then start by TAXing the famiLEE for Estate Duties back in 2008 first, yes? LOL.

    Secondly, there should be NO taxes on current wealth, but only on Estate Duties.
    This principle is simple: 1st generation wealth is accrued due to the work effort, intelligence or plain luck of the person involved, so you should NEVER punish 1st gen wealth whatsoever, otherwise economic vibrancy and innovative impetus will be lost.

    The same CANNOT be said for 2nd generation wealth TRANSFERS, which is purely inheritance & UNDESERVED wealth (such as the likes of LHL from his Papa yes? LOL)

    Thus, you have to be very clear WHO you are taxing to maximize economic vibrancy while minimizing uneven and PERSISTENT wealth disparities.

    If EVERY generation is allowed to TRANSFER wealth to 2nd, 3rd, 4th generation and so on… then inevitably the rich-poor GAP will widen, since the Nth generations thereafter will always have MORE and MORE share of Earth’s resources.

    However, if you TAX away a HUGE part (say 99%) of each generational wealth transfers, then you LEVEL the playing field for the all FUTURE generations – which is the only logical & best approach to offset over-accumulation by the rich and perpetual scarcity for the generations of the working poor.

    The longer you defer ESTATE DUTIES, the WORSE will be the rich-poor disparities especially in a tiny island such as Sinkingpore, where its a matter of time that the top 0.001% will buy over 90% of all properties here. LOL.

    So, Tang Li still have’nt wake up his idea yet on “How to Tax 101″. LOL.

    Finally, ask him also to please DEFINE “lazy wealth” before we can properly tax lah. There is no way to define “lazy wealth” lor.

    For example, “investing” in stock market is also a form of “lazy wealth”.
    You just throw money into some index or a counter with good dividends, then sit and do NOTHING for inflationary effects to kick in over decades, then viola!

    In fact, investing in stock market or REITS is an even more “lazy” form of building wealth than actual landlording. If you operate as a landlord, you have to be the one to chase for payment of deadbeat tenants or clean up the mess of tenants who leave behind their rubbish or damage your property etc.

    So, which is more “lazy” – stock market or property investing? Duh. LOL.

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  • Trust only myself:

    Talk about billionaires creating jobs…………must be a joke and only unthinking Singaporeans don’t know.

    Ever heard of billionaire buying football club in Europe and they are creating jobs for local footballers?

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  • Biden's Stewarded Precious Gas:

    I’m not a billionaire, but I would happily pay higher taxes if Sinkies are not so stupid and greedy.

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  • oxygen:

    HDB RESALE LEVY is already “wealth tax” BUT THAT IS RESERVED for peasants only exclusively and peasants DON’T EVEN OWNS their public housing dwelling.

    In law and in documented legal instruments evidencing “ownership”, buyers of HDB are mere “tenants” in the dwelling of permissible leasehold occupancy.

    61% of the peasants are TOO STUPID TO EVEN BEGIN TO DISCOVER they are stupid beyond infinity.

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  • All in the familee.....:

    Q: How do you kill a rampaging red elephant?

    A: Shoot it with a red elephant gun.

    Q: Well then, how do you kill a sneaky white elephant?

    A: Pinch its trunk till it turns red, then shoot it with a red elephant gun.

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