Facebook post by Joseph Nathan

THE HARD TRUTHS OF IMPLEMENTING WEALTH TAX IN SINGAPORE:

 

In an interview with John Micklethwait, the editor-in-chief of Bloomberg News, PM Lee said that “efforts to ease inequalities through wealth taxes face challenges including ensuring fairness and risks to the city-state’s competitiveness.”

 

He further cited that “we need to find a system of taxation which is progressive and which people will accept as fair.”

 

What is obvious is that “people” here refers to wealthy individuals and Lee will need to get their consent before implementing these “wealth taxes”.

So who are these "people" and why must he gets their consent first?

 

Singapore Context:

 

Singapore is known as the playground for the rich and famous as our government is inclined to roll out the red carpet to welcome these individuals, more specifically, their wealth.

 

But if “wealth taxes” can be seen as a form of a small "entrance fee" in exchange of lower tax and security, and if Singapore is still more superior than other countries in terms of its comparative advantages, then this should not be an issue as most wealthy individuals will gladly pay such a tax to safeguard the value and security of their wealth.

 

Domestically, we also have many wealthy individuals, some from the “old rich” and many newer ones who have gained their wealth from politics since some of our politicians are known to be paid in millions and also hold several lucrative directorship representations and benefited from rise in value of their landed properties.

 

For the “old rich”, most of them are quite patriotic and wise, knowing well that if the wealth-divide and income-disparity are to be allowed to grow out of control, then they too will  be vulnerable to any socio-economic shocks when hardships drive the nation into chaos and helplessness.

 

But the newer ones, like some retired politicians and their families may not be so forthcoming in sharing their newly-acquired wealth and may “lobby” against Lee.

 

In truth, they will be no match if Lee is adamant about introducing such taxes.

 

Problem is, what if there are some "arrangements" that allow these politicians some “tax-free” exemption/s, and if so, can the government still claw back these exemptions without burdening our tax-payers?

But these, if valid, are still small issues that will not keep Lee awake at night.

 

The Real "Problem Child" In Introducing Wealth Taxes:

 

There is also another class of individuals that have acquired new wealth - the 4G politicians, senior civil servants and senior executives in our GLCs and other government-link entities such as GIC and Temasek.

 

Unless Lee introduces some new legislation to remove their remunerations as “state secrets”, then IRAS will not be able to calculate and tax these group of individuals.

 

For Lee, this group may be what he is referring to when he cited “difficulties in introducing wealth taxes” and rightly so.

 

Think about it.

 

For any of the proposed wealth taxes to be implemented equitably and with transparency, no one can be exempted from such taxes.

 

That will mean that all such politicians, executives and public servants will no longer be able to hide their wealth by citing “state secret” as an excuse.

As such, the real problem in implementing wealth taxes lies with the need to be upfront and transparent, but the use of "state secrets" to prevent full disclosure is the real "problem child".

 

This means that they will now have to declare their wealth, including any remuneration-in-kinds that have “material impact” on taxation, such as shares, options, gifts, goodwill benefits, company-paid endowments and special benefits etc.

 

That will also mean that all public servants and politicians will have to accept public scrutiny of all their personal wealth, remunerations and income, starting with Lee having to lead by example in showing the way forward for the rest of his team to follow.

Here lies the real challenges.

 

Political Consequences:

 

Will Singaporeans still be kind and rooting for Tharman Shanmuaratnam for the office of Prime Minister should they finally get to know how much he has been drawing all these years?

 

Will Singaporeans still be kind to Ho Ching, the wife of Lee and Chairman-designated for Temasek, should they find out how much her total remuneration is actually costing the nation?

 

How will some of the PAP politicians defend the lucrative remunerations of their spouses and children who are helming or holding senior positions in government-link agencies and entities?

 

The Hard Truth is that for Lee to even be serious about implementing wealth taxes in Singapore, he will first need to address all these internal consequences.

So Lee was right and honest in sharing that it is "not so easy".

 

Incentivizing Real Political Changes:

The easy way out for Lee will be to cite “challenges” and be contented with status quo - by continuing to impose more tax-increases on the working class of Singaporeans, as they have the least resistance to any tax or cost increases, in order to grow our economy and reserve with a trade sulpus.

In a weird way, it seems that our present governmental-system has a way in encouraging politicians to take the easy way out of any problems. 

 

So how will Lee be addressing these "internal challenges” and what can we expect?

Lee's Key Governing Prority:

The key challenge for Lee actually depends on where his key priority lies when it comes to governing the country.

If it is "with the people", then he will know exactly what to do "for the people".

But if his key priority is with his party or their political agenda and personal ambitions, then it is not going to be easy.

By saying that implementing wealth taxes is "not so easy", could Lee be telling fellow Singaporeans that we ought to be realistic and not expect him to upset the interests of the new political elites?

If so, then the working class and retirees got to accept the Hard Fact that more tax & cost increases will be coming our way and that we ought to be grateful for the occasional handouts.

But can we blame Lee for sticking to staus quo by taking the easy way out and putting the full burden of tax on us?

The answer is obviously "no" as a large segment of Singaporeans has given him the mandate to keep to status quo, election after election, instead of encouraging him to change for the better.

Think about it - unless the PAP loses their parliamentary majority at the next election, there is no real incentive for Lee or his successor to change.

So instead of burdening Lee with more of such trivial questions, Singaporeans ought to be asking ourselves what do we really want.

If we want real change for a better Singapore, then why aren’t we using our votes wisely to encourage and support deserving parliamentarians during past general elections, and incentivize them to put the interests of fellow Singaporeans ahead of their party's agenda or other self-interests?

Until we have sufficient parliamentarians to stand up for the interests of fellow Singaporeans, we cannot expect Lee or his successor to fight against the power of the new political class in Singapore, can we?

So let us start by taking our votes more seriously at the next general election if we still aspire for a more equitable society and bring the new political class of elites into order.

In the interim, there is really no point in talking about any wealth tax or asking Lee if he still believes that Singaporeans deserve better...