Government will not focus on taxing individuals based on their net wealth: Lawrence Wong

IN introducing a wealth tax in Singapore, the government will not focus on taxing individuals based on their net wealth, but will look at the entire system of taxes here and identify areas which can be further strengthened instead, said Finance Minister Lawrence Wong on Wednesday (Nov 17).

He noted that Singapore has already introduced some versions of a wealth tax, raising the examples of property and motor vehicle taxes, where those who own bigger and more expensive properties and cars have to pay more in taxes.

"So in that sense, we look at the system of wealth taxes more broadly, and it's within that broad context that we will continue to review to see what additional ways we can do to strengthen our system of taxation so that we can generate revenue but do so in a way that's fair and progressive," he said.

Wong made these comments during investment banking company Morgan Stanley's 20th Annual Asia Pacific Summit, where he was asked how the government would mitigate the potential impact a wealth tax could have on the financial services industry.

Responding, he said that the government is "very mindful" that any new tax system or increase in taxes could become counterproductive if individuals are able to easily move their money elsewhere to avoid being taxed.

"Whatever enhancements we do, we want to make sure that it doesn't undermine our competitiveness and the tax can be efficiently collected in Singapore."

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During his keynote address, Wong also spoke about how the Covid-19 pandemic has revealed supply chain resilience as a pressing issue that needs to be addressed.

Though many countries have moved to enhance domestic production in response, he warned that such a solution is not a "silver bullet" and leaning too much on being self-sufficient could have unintended consequences.

"We may all end up with higher prices, poorer quality goods and services, and reduction in choices," he said, noting that domestic suppliers can, too, become crippled during a pandemic.

Therefore, Wong said the key should be to enhance, instead of dismantle, the global supply chains.

This can be done by diversifying across suppliers and transportation networks and strengthening international coordination to ensure that key supplies and transport networks are always available and open.

Returning to Singapore as an example, he pointed out that the government never introduced export controls throughout the pandemic, even when the country was short of key items like N95 masks and coronavirus vaccines.

"This is how we strive to be a trusted and reliable node in the global network," he said.

Separately, responding to a question on Hong Kong and Singapore, Wong said the financial markets are large enough to have both cities operate as Centres of Excellence.

After all, he noted that Hong Kong has chosen to focus on the China market, as seen from how it has opened its borders to China and not yet the rest of the world.

"We both can complement one another, not just serving different markets but also focusing on different niches and different areas in the entire spectrum of financial services," he said.