Singapore Looks To Expand Wealth Tax
Singapore is a developed country known for its economic, political and social stability. Over the past decades, the country has attracted wealthy individuals and leading firms from all over the world to relocate to or establish their presence in Singapore. With guidance from your economics tutor Singapore in economics tuition Singapore, discuss the comparative advantages of Singapore. These include, among others, Li Xiting, founder and chairman of Shenzhen Mindray Bio-Medical Electronics; Eduardo Saverin, co-founder of Facebook; Zhang Yong, founder of Hai Di Lao and Forrest Li, founder of Garena and Shopee.
Existing Wealth Tax System
Singapore’s existing wealth tax system comprises progressive personal income tax, progressive property tax, and stamp duty on properties, among others. Depending on a tax resident’s chargeable income, the Inland Revenue Authority of Singapore (IRAS) imposes an income tax rate of between zero per cent and 22 per cent. This ensures that wealthier individuals pay a proportionately higher tax. In consultation with your economics tutor Singapore in your economics tuition Singapore class, compare Singapore’s personal income tax with that of the United States of America and China.
Owner-occupied properties are charged a progressive property tax of between zero per cent and 16 per cent of their annual value. As for non-owner-occupied properties, a much higher property tax of between 10 per cent and 20 per cent of their annual value is applicable. Non-residential properties, such as commercial and industrial properties are taxed at a uniform 10 per cent of their annual values. To learn the definition of annual value, you may sign up for economics tuition Singapore with a reputable economics tutor Singapore. Mr Edmund Quek is revered as the best economics tutor Singapore. The economics tutor Singapore is also the founder and principal economics tutor Singapore of Economics Cafe Learning Centre, a premier economics tuition Singapore centre.
There are different types of stamp duty, including stamp duty for lease, buyer’s stamp duty, additional buyer’s stamp duty and seller’s stamp duty.
Possible Ways To Expand Wealth Tax System
The Monetary Authority of Singapore, Singapore’s central bank has indicated earlier a need for Singapore to shift “from taxing income towards taxing wealth”. To do this, the government may impose a tax on property gains and inheritance. The purpose of a property gain tax, as shared by its managing director Mr Ravi Menon, is to promote a more inclusive society and address wealth inequality. As is the case across the world, the wealth gap can be primarily attributed to property gains. Hence, it is pivotal for Singapore to tax on property gains to mitigate the divergence in housing wealth. You may consult your economics tutor Singapore in your economics tuition Singapore class about the relationship between wealth gap and housing wealth.
Another way is to tax on inheritance, which has been adopted by many developed countries such as the United States of America, the United Kingdom, Japan and South Korea, among others. Japan has the world’s highest estate or inheritance tax of 55 per cent, followed by South Korea of 50 per cent. The United States of America ranks 4th, together with the United Kingdom, with 40 per cent. In discussion with your economics tutor Singapore in economics tuition Singapore, compare the efficacy of inheritance taxes in Japan and the United States of America.
Apart from the wealth tax system mentioned above, Singapore also uses government transfers and heavy subsidies for public housing to reduce wealth gap. As a result, Singapore’s Gini coefficient has been on the decline for the past 14 years. The Gini coefficient is a measure of income inequality. Its value is between zero and one. A Gini coefficient of zero means perfect equality.
Linda Geng
Economics Tuition Singapore @ Economics Cafe
Principal Economics Tutor: Mr. Edmund Quek