A Wealth Tax Should Not be a First Option

A wealth tax is not the way we want to go.  The nature of such taxes is that they will impact the mass affluent and HNW more than the VHNW and UHNW.  With enough money, it is possible to create tax vehicles and hire the sort of tax and financial consultants to avoid the brunt of those taxes, mostly through distinct legal entities such as trusts.  A legal entity other than a natural person is taxed after expenses.  The mass affluent and HNW generally got there due to earning from professional work, such as doctors, lawyers, and other specialists.  They do not, yet, have access to the level of financial advisory that the next tier of wealthy do. 

Another point of consideration is that while the UK and the US have much higher taxes, despite being among the most competitive nations in the world, they have depth in their capital markets that countries as Singapore, and even Japan, do not.  Nobody is rushing to list on the Tokyo Stock Exchange, and there is barely any secondary market for Singapore listings.  Singapore’s competitive advantage is a low tax regime.  This is how we attract talent. 

We should consider raising the various forms of consumption tax, not income and capital gains.  This consumption tax can be on a sliding scale so it does not adversely impact the lower socioeconomic classes.  This will not be enough, of course.  The main issue is that we need to grow the tax base, not tax the shrinking tax base more.