Sustaining Singapore’s edge as a global financial and wealth hub

WEALTH management – it is like holding a bird in hand. Held too tightly, the bird dies; held loosely, the bird flies.

The world does not owe the “red dot” a living. Competition will increase for the wealth management business. Singapore has to stay ahead.

Singapore’s tax framework has long been guided by prudence and balance.

It has traditionally favoured consumption-based taxes such as the goods and services tax and asset-based levies such as property taxes over high direct levies on earned income.

This approach encourages productivity and enterprise while ensuring those who consume more contribute proportionately more to the nation’s revenue.

As Singapore matures economically, it may be timely to expand the tax base.

One way is through a new, targeted sales tax on luxury and branded goods and equipment priced, for example, above S$1,000.

This would be distinct from the prevailing GST.

Since there is a limit to how high existing broad-based indirect taxes can be raised, this offers a new source to enlarge our tax base.

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Such a targeted measure would not only generate additional tax revenue but also serve as a progressive tool to reduce income inequality.

It ensures that the affluent contribute more, without burdening the average citizen, and helps strengthen the social compact. This consumption-based approach seems preferable to introducing a broad direct wealth tax, which could prompt the flight of capital and talent to more competitive jurisdictions.

Singapore’s reputation as a trusted, stable and transparent financial centre rests on its economic stability, political credibility, clear legal frameworks, and open flow of funds.

It is this environment of trust and consistency that continues to attract high-net-worth individuals and global wealth management institutions to our shores.

Preserving these fundamentals, while adapting wisely to the changing global financial landscape and uncertainty, will determine whether Singapore can sustain its edge as a leading financial and wealth management hub in Asia in the decades ahead.

Tan Kok Tim