By Faris Mokhtar and Krystal Chia
(Bloomberg) — Singapore’s prime minister said 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,” Lee Hsien Loong said in an interview Wednesday evening with Bloomberg’s Editor-in-chief John Micklethwait 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 said. “And if you’re less well-off, you should enjoy a greater amount of the government’s support schemes and benefits.”
For Singapore, a small and stable island nation that’s long attracted regional wealth, the issue of wealth taxes has been woven into a broader political debate over immigration and the widening wealth gap.
Lee’s comments Wednesday echo similar signals from top politicians. 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.
Singapore’s low taxes and stability have long attracted the world’s wealthiest, helping it become a regional center for private banking, family offices and asset management.
As well, its relative success containing the pandemic and successful vaccination rollout lured more wealthy families seeking shelter in Southeast Asia’s sole developed nation.
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,” Lee said. “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, Lee 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, Lee 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.”
The New Economy Forum is being organised by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
© 2021 Bloomberg L.P.