Singapore wealth tax 'not so easy to implement': PM Lee

Those who can pay more should bear a larger burden, while the less well-off should enjoy a greater amount of the government's support schemes and benefits, he says

Nov 18, 2021

Singapore

BLOOMBERG - PRIME Minister Lee Hsien Loong said that efforts to ease inequalities through wealth taxes face challenges including ensuring fairness and risks to the city-state's competitiveness.

"We need to find a system of taxation which is progressive and which people will accept as fair," he said on Wednesday (Nov 17) in a dialogue at the Bloomberg New Economy Forum in Singapore.

"And fair means everybody needs to pay some, but if you're able to pay more, well you should bear a larger burden," he explained. "And if you are less well-off, you should enjoy a greater amount of the government's support schemes and benefits."

For Singapore, the issue of wealth taxes has been woven into a broader political debate over immigration and the widening wealth gap.

PM Lee's latest comments on Wednesday echo similar signals from other ministers.

Finance Minister Lawrence Wong in September stressed any wealth levies need to fit into a "fair and progressive" tax system, adding that more details could be included in the next Budget, which will be announced in February 2022.

Wealth taxes are not new in Singapore, and the government has been raising taxes, for example on properties and cars, over the years.

"I think it's an element in a comprehensive revenue system," PM Lee noted.

"You tax consumption, you tax income, you tax savings. And you should tax wealth, whether wealth in the form of property, ideally wealth in other forms."

However, he said, finding effective ways to tax other forms of wealth is "not so easy to implement".

Asked if additional wealth taxes will drive wealthy foreigners elsewhere, the prime minister acknowledged that as one of Singapore's concerns, noting that a global agreement on minimum corporate taxes doesn't mean nations will stop vying for business investment.

"Competition will pop up in some other forms" between countries even after a global tax deal, he said. "It's unavoidable. And if you do wealth taxes, you may come up with the same problem," he said.

Turning to the ongoing coronavirus pandemic, PM Lee said Singapore's game plan for reopening remains "step by step".

The country is trying to ease its virus restrictions without having to dial back, and is trying to see an end-path without high costs, he added.

The Ministry of Health reported 3,474 new daily Covid-19 cases on Wednesday, with 7 more people passing away from complications due to the infection.

"What I am trying to do is ease up a little bit, make sure things stabilise, (then) ease up a bit more, make sure things stabilise again and ease up a little bit more. Eventually, it will probably not be back to status quo ante but close enough, and without having had to make unsettling U-turns," said PM Lee.

"If I have Freedom Day, and after 3 weeks cases flare up and I have to tighten up, it's very upsetting to the population. It's confusing, they will be frustrated and disappointed. And you may well pay a price along the way - a human price."

"So I think it's better we take it step by step. I'm not absolutely certain that I can do this without any misstep. I may have to step on the brakes again from time to time. But that's my game plan," added the prime minister.