Listen to Today's Edition
In the 2013 novel (and 2018 hit film) “Crazy Rich Asians,” the ingénue travels to Singapore and realizes that her boyfriend is so fabulously wealthy that their backgrounds might be too different for them to share a life together.
Spoiler alert – things work out for the couple. But the film illustrates how the machinations of the affluent send ripples through the small, cosmopolitan country, a former British colony now dominated by ethnic Chinese.
To that end, a recent proposal to hike taxes on the rich is making serious waves.
First, some context. More than 13 percent of Singapore’s adult population will be millionaires in the next eight years, Fortune reported, citing global bank HSBC. If that occurs, the Southeast Asian city-state will have more millionaires than China and the US proportionately to population.
But post-pandemic inflation, government budget shortfalls and the income gap between the rich and poor have led Singapore’s government to consider measures to help lower-class families make ends meet.
“Everybody pays some form of taxes but certainly the ones with greater means – the rich and the higher-income – will have to pay more,” Deputy Prime Minister and also Finance Minister Lawrence Wong told Bloomberg Wealth. “It’s not only done through the taxation system but we also can do it through transfers and spending and make sure that spending is targeted at the lower-income (demographic) and those with greater needs.”
A campaign to increase social benefits for food delivery drivers is an example of the political ructions that such wealth disparities can cause, noted Reuters.
As Bloomberg wrote, measures could include reinstating the estate tax, which was abolished in 2008, instituting taxes on capital gains or percentages of total assets (also called a wealth tax), cutting tax breaks for philanthropy or simply raising preexisting tax rates on sales, income and excise duties on big-ticket items like cars.
Critics might argue that such new taxes would impede economic growth in Singapore. The question, however, is how much less Singapore can grow given how much wealth is pouring into the country.
More than a dozen investment firms open offices in Singapore every month due to policies that lure the firms from low-tax jurisdictions around the world, the Financial Times reported.
Wealthy folks from mainland China are flocking to Singapore, too, a safe haven for holders of capital who want to avoid the long arm of their authoritarian, communist leaders.
New Chinese millionaires and billionaires have established 63 of 143 family offices – private investment management firms that service moneyed individuals – in Singapore in the last year through April, reported the Business Times, a local financial newspaper. That’s one reason officials made a point to say the country still welcomed immigrants, Xinhua added.
The proposed new taxes, in other words, might actually be entrance fees.