MAS chief says wealth tax could tackle wealth inequality in Singapore


MAS chief Ravi Menon said there may be a need for a property gains tax or an inheritance tax to address wealth inequality.- INSTITUTE OF POLICY STUDIES

SINGAPORE (The Straits Times/ANN): The chief of Singapore's central bank said there may be a need for a property gains tax or an inheritance tax to address wealth inequality in the Republic, which he noted will worsen over time if price increases in private housing consistently outstrip that in public housing.

To promote an inclusive society, it might make sense to shift the balance in Singapore's tax structure away from taxing income towards taxing wealth, said MAS managing director Ravi Menon on Thursday (July 22) at an Institute of Policy Studies lecture.

He said the widening wealth gap across the world has historically been driven most strongly by property investments.

Those with higher incomes can afford larger investments in real estate, and the substantial value appreciation they enjoy over time is not available to those with lower incomes and smaller outlays for housing.

Singapore has data in relation to employment income. However, as Menon noted, it does not have good data on wealth.

But it would appear that the wealth gap is widening here to some extent, although the heavy subsidisation of public housing and high rate of home ownership would have mitigated some of the divergence in housing wealth.

"In very few countries do most citizens have the opportunity to enjoy capital appreciation in housing assets as we do in Singapore.

"But if price increases in private housing consistently outstrip that in public housing, wealth inequality will worsen over time, even if not to the same extent as in many other countries."

While Singapore's wealth taxation has become more significant and progressive over the last 10 years, he said there is probably room to go further in that direction to promote an inclusive society. He added that a wealth tax could take the form of either a property gains tax or an inheritance tax.

Both are currently not imposed here.

However, Menon cautioned, that taxing wealth has not worked well in many countries.

Citing the example of 12 European countries which levied an annual tax on net wealth in 1990, he said that by 2018, eight out of these 12 countries had abandoned the tax citing high administrative costs, risk of capital flight, and, ironically, failure to meet redistributive goals.

"This is not necessarily a reason for not imposing a wealth tax but a strong caution that designing a good wealth tax is not a trivial exercise," he said.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights
   

Next In Aseanplus News

Asean News Headlines as at 9pm on Friday (July 23)
UK appoints new ambassador to Myanmar
Olympic Games opens with modified pomp in Covid-struck Tokyo
Protest breaks out at prison in Myanmar's biggest city
Indonesia reports record Covid-19 deaths of 1,566 and 49,071 new cases
Singapore announces S$1.1bil Covid-19 support package for workers, firms: What you need to know
Those who are fully vaccinated against Covid-19 will enjoy more benefits, says Health DG
Indonesia's vaccine diplomacy strategy: Jakarta Post
China unveils blueprint for central region's growth
130 new locally transmitted Covid-19 cases in Singapore, including 78 linked to Jurong Fishery Port

Stories You'll Enjoy


Vouchers