Could A Potential Wealth Tax Deter Wealthy Tech CEOs From Moving To Singapore?
Singapore's government might be hinting at a change in its stance on a possible wealth tax.
Singapore's Finance Minister, Lawrence Wong, recently told Bloomberg's Haslinda Amin that the Ministry of Finance never rules out any revenue options as part of the country's annual budget when it comes to wealth tax. However, any form of wealth tax should first be "fair and progressive".
Minister Wong's statement was in response to Amin's question if Singapore's budget could include a wealth tax to achieve a 6-7% growth despite the pandemic. However, Minister Wong declined to share the key considerations to implementing a wealth tax or new ways of doing so, calling the inquiry premature as budget plans are typically announced in February.
However, what could the inclusion of wealth tax in Singapore mean for CEOs of big tech companies that are in the country or are planning to move into the country soon?
It's highly possible that if a wealth tax does come to pass, we might see fewer tech CEOs moving to Singapore as they've done in the past, with notable examples like James Dyson before his move back to the U.K. earlier this year.
That being said, many tech companies from other countries are moving into Singapore either due to the tightening of regulations at home like Tencent and ByteDance or as a business move like Dyson and Grab.
Minister Wong said that while Singapore does have its reserves for national emergencies, the country should still live within its means by and large.
"If there is no crisis, no emergencies, we should be able to sustain recurrent expenditures using recurrent revenues," Minister Wong said. "We have to manage this because expectations for rising expenditures are growing to cope with an ageing population and social needs."
Minister Wong also added that the overall taxation system must be fair, equitable and progressive so that those with the means are able to pay more. "And I think in that context, any form of wealth tax would fit in that broader system," Minister Wong said.
The effect of the pandemic has led to a point where Monetary Authority of Singapore Managing Director Ravi Menon said that there may be a need for a wealth tax in the form of property gains tax or inheritance tax to address wealth inequality in the country. Director Menon also added that said inequality would worsen if private housing prices continue to increase to the point it consistently outstrips the cost of its public counterpart.
Local experts are also warming up to the idea of including wealth tax in the country's tax system. Ramkishen S Rajan and Bhavya Gupta from the Lee Kuan Yew School of Public Policy said that it's time to add wealth tax to meet future challenges.
Rajan and Gupta's study cited the overall deficit of 13.9% in Singapore's gross domestic product in 2020 due to the fiscal strains of the COVID-19 pandemic, long-term pressures on government spending due to structural factors like the rise of healthcare spending and the replenishment of depreciating infrastructure, the calls for a more comprehensive social insurance and the globally agreed minimum corporate tax rate as reasons for the inclusion.
While it's still some time away before any potential wealth tax comes into effect, it'll definitely be interesting to see how the wealthy CEOs of tech companies react to this news.
Written by John Paul Joaquin