As published on straitstimes.com, Wednesday 17 November, 2021.
SINGAPORE - Singapore seeks to ensure any enhancements to its tax system should not undermine its competitiveness and that such taxes can be collected efficiently, Finance Minister Lawrence Wong said on Wednesday (Nov 17).
The Republic is also being mindful that any new taxes or increase in taxes have to be implemented while recognising that wealth is mobile and can be moved very quickly.
"And so if you're not careful, you (could) have a tax in place that doesn't actually end up collecting very much money, (and) it's counterproductive because the wealth just moves around to other places," said Mr Wong, in acknowledging the possible risks and impact of tax changes on the country's financial services industry.
Mr Wong was replying to a question on potential wealth taxes in Singapore at the 20th annual Morgan Stanley Asia Pacific Summit, which is held from Wednesday till Friday at Mandarin Oriental, Singapore.
The minister, who is also deputy chairman of the Monetary Authority of Singapore, had earlier spoken about fostering a more sustainable and resilient model of globalisation for the post-Covid-19 world in his keynote speech.
He stressed that Singapore's approach to wealth taxes is not to focus narrowly on the concept of taxes based on one's net wealth, but to look at it through the country's overall taxation system.
"It's within that broad context that we will continue to review, to see what additional (measures) we can do to strengthen our system of taxation so that we can generate revenue, but do so in a way that is fair and progressive," said Mr Wong.
In his reply, he noted how Singapore looks to maintain a balanced budget over the medium term, adding that the country is already in deficit at present having drawn on its reserves over the past two years.
This means that it has to find ways to get back to a balanced budget as soon as possible and is looking at a whole range of revenue options.
"When we look at any revenue option, we want to make sure that it strengthens our progressive system of taxes, which means that those with means ought to pay more tax," said Mr Wong, adding that this is true for both income tax and goods and services tax.
He also highlighted that Singapore's principal considerations for tax enhancements are that its competitiveness is not undermined and that such taxes can be efficiently collected.
He added that he could not comment further because it would get into specifics as to what the Government is thinking about for the next Budget.
During the session, which was moderated by Morgan Stanley's Asean chief executive Ronald Ong, the minister also addressed several other questions such as how Singapore plans to ensure it remains a core financial services hub and the growth opportunities it looks to capitalise on.
Mr Wong said he believes companies operating in Asia would still want a physical presence, even as work habits shift post-pandemic.
What Singapore wants to do is to ensure that it is top of the list if firms are looking at establishing their presence in the region, especially in South-east Asia, he added.
Mr Wong also said Singapore is interested in technologies such as blockchain and tokenisation of assets - and not so much in the speculative asset class of cryptocurrency - and encouraging projects and innovation in these areas.
"We want to continue in that mindset to embrace innovation, update our regulatory frameworks to make sure that they cover these new trends and then progress as an innovative financial centre for the region and the world."