Commentary: Taxing the wealthy make sense when there is little room for higher income tax or GST

SINGAPORE: In his Budget 2023 speech on Tuesday (Feb 14), Deputy Prime Minister and Finance Minister Lawrence Wong continued his approach to wealth taxes, increasing buyer’s stamp duty (BSD) for higher-value properties and further taxing luxury cars.

The decision came as an initial surprise since similar moves were made just last year, when Mr Wong rolled out higher income tax, property tax and vehicle tax at the top tiers.

WHY SO SOON?

These latest changes clearly enhance the progressivity of the BSD and vehicle tax regimes, echoing last year’s moves of getting those who have more to contribute more, which would include recent waves of ultra-wealthy individuals and families relocating to Singapore.

For residential properties, the new higher rates of 5 per cent and 6 per cent apply to the portion of the value in excess of S$1.5 million and up to S$3 million and in excess of S$3 million respectively, up from the current 4 per cent introduced in February 2018. Earlier cooling measures like higher additional buyer’s stamp duty (ABSD), last increased in December 2021, have not seemed to have deterred wealthy property buyers.

For non-residential properties, the current rate of 3 per cent will be increased to 4 per cent for the portion of the value in excess of S$1 million and up to S$1.5 million and 5 per cent for that in excess of S$1.5 million.