Singapore — Workers’ Party MP Jamus Lim (Sengkang GRC) proposed a wealth tax of between 0.5 per cent and 2 per cent in a motion in Parliament on Monday (Nov 1). This would be imposed upon individuals whose net wealth is in excess of $10 million and above.
The MP, an Associate Professor in economics at Essec Business School, argued that a wealth tax would result in a decrease in income and wealth inequality as well as diversify sources of revenue for the country.
Assoc Prof Lim pointed out that there is a disproportionate effect on lower-middle and middle-income families with the goods and services tax (GST), and asked Members of Parliament not to be “content that the system happens to be progressive overall.”
He argued that “inequality is a real and pressing issue” in Singapore, adding that “our nation’s effort at redistribution” of wealth “have been far more restrained than in other advanced economies, including that of our immediate neighbours.
We can do more to address our inequality problem.”
The Sengkang MP also gave a mini history lesson to underline his point that Singapore is no “stranger” to wealth taxes, and thus, proposed that a general tax of 0.5 per cent on net wealth in excess of S$10 million, 1 per cent above S$50 million and 2 per cent above S$1 billion be introduced.
“My heartfelt belief is that all of us, the ultra-wealthy included, want to live in a world where we can all contribute our fair share to make it a better place, both today and for our children. That is how I view wealth taxes,” he said.
Second Minister for Finance Indranee Rajah responded to Assoc Prof Lim’s motion, saying that authorities will continue to review imposing a wealth tax.
She said that the government is consistently looking for ways to supplement its revenue, but endeavours to do so in a way that strikes the right balance.
“We have to tax in a way that is competitive, and allows people and companies to generate revenue in order to encourage them to stay here, and that revenue can be used and allocated and redistributed.”
However, she took issue with Assoc Prof Lim’s assertion that the GST disproportionately affects lower- and middle-income households more, adding that this is a line that the WP often uses.
“To be fair, it is very important to also look at what we do to support and buffer the middle- and lower-income in order to take away any of the additional burden that falls on them as a result of GST, and in that way we make it a fairer system,” Ms Rajah added.
Assoc Prof Lim’s speech may be viewed in full here.
/TISG
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