Singapore is increasing taxes aimed at the city-state's richest residents with levies on some incomes, property and cars all set to rise in a move expected to eventually raise a combined S$600 million (US$447 million) a year.
Increased personal income taxes for those earning more than S$500,000 a year will raise an additional S$170 million, while new property taxes will net an extra S$380 million and car levies will give the government another S$50 million a year.
The tax raises come as the government looks to boost revenue in an effort to help fund a vast array of spending programs.
Higher taxes on wealth generate revenue and "help to circulate a portion of the wealth stock back into our economy and in so doing help mitigate social inequalities," Finance Minister Lawrence Wong told parliament Friday. "Wealth taxes are therefore needed to help build a fairer society where everyone can aspire to succeed regardless of their backgrounds."
Taxing the one percenters
Residents with annual income of over S$320,000 currently pay 22 per cent in tax. From 2024 onwards, incomes between S$500,000 to S$1 million will be taxed at 23 per cent while those above S$1 million a year will pay 24 per cent in a move expected to affect the top 1.2 per cent of personal taxpayers and raise S$170 million.
Singapore, already one of the world's most expensive places to drive a car, will further increase that cost. A new tier of tax on vehicles with a market value above S$80,000 is expected to raise S$50 million in revenue a year.
But the bulk of the new funds will come from taxing high-end properties. For owner-occupied residential properties, the tax for the portion of annual value in excess of S$30,000 will be increased to between six per cent and 32 per cent -- from the current range of four per cent to 16 per cent. For non-owner occupied residential properties, the current tax rates of 10 per cent and 20 per cent will be increased to 12 per cent to 36 per cent.
Once fully implemented, the changes will raise Singapore's property tax revenue by about S$380 million a year, Wong said.
"Ideally we would want to tax the net wealth of individuals but such a tax is not easy to implement effectively," he said. "Many forms of wealth are mobile and as long as there are differences in wealth taxes across jurisdictions, such wealth can and will move."
A growing fear among locals that social mobility has slowed is pushing the government to re-examine some of the policies that have made it one of the wealthiest nations in the world.
Singapore's considerable wealth has been built on its status as a stable, open, technologically advanced economy with low taxes. Inheritance, dividends, investment income and capital gains are all untaxed.
That's made it a hub for the world's richest, from Facebook Inc. co-founder Eduardo Saverin to gaming billionaire Forrest Li. It's also spawned a boom in private banking, family offices and asset management. - Bloomberg
