Wealth tax on the cards in Singapore but its form and shape will need deliberation

THE possible introduction of a wealth tax was flagged on a number of occasions in the lead-up to the 2022 Budget. While a wealth tax was eventually not tabled at this year's Budget, a recurrent theme in Finance Minister Lawrence Wong's speech was the need to maintain the social compact, and to ensure that those with the greatest capacity to pay contribute accordingly. This is especially in light of the projected costs associated with an ageing population and the need to ensure all Singaporeans share in the nation's prosperity.

Wealth tax a possibility in the future?

Minister Wong has indicated that the government will study the implementation of a wealth tax in the future. This will draw upon the experiences of European countries, and presumably will consider in equal measure countries which have now repealed their wealth taxes as well as those, like Switzerland, that continue to impose such a tax. The challenges of a tax on net wealth were discussed in detail in a 2018 study by the Organisation for Economic Co-operation and Development (OECD) and are fairly self-evident. They include difficulties with measurement, compliance and the risk of capital flight.