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Analysis: Wealth taxes on inherited property, luxury cars are 'attractive' suggestions by MPs, but challenging, costly to enforce

SINGAPORE — A tax on luxurious goods such as high-end cars and landed property as well as an inheritance duty on multi-million-dollar homes may seem like plausible ways to protect Singapore's meritocracy, but it can be challenging and even costly to implement and enforce such measures.

A file picture of people looking at Porsche, Ferrari and Lamborghini cars near the Singapore Flyer during the Formula One motorsports race in Singapore.

A file picture of people looking at Porsche, Ferrari and Lamborghini cars near the Singapore Flyer during the Formula One motorsports race in Singapore.

  • Two parliamentarians suggested imposing taxes on the rich to level the playing field and protect meritocratic ideals
  • These suggestions may seem attractive, but they are costly and challenging to execute and enforce, tax experts and economists said
  • Some of the challenges would include the administrative burden of classifying goods, and how the wealthy could escape an inheritance tax by gifting their property
  • Beyond that, it could make Singapore less attractive for wealthy individuals to live in, causing the country to miss out on investments and inflow of funds

SINGAPORE — A tax on luxurious goods such as high-end cars and landed property as well as an inheritance duty on multi-million-dollar homes may seem like plausible ways to protect Singapore's meritocracy, but it can be challenging and even costly to implement and enforce such measures.

Experts interviewed by TODAY pointed to administrative challenges such as classifying luxurious goods to be taxed further and how the wealthy can get around an inheritance tax by gifting a property.

Inheritance tax can also be easily misperceived to be applicable to the less wealthy, while wealth taxes in general might make Singapore less welcoming to the ultra-rich, including both Singaporeans and foreign talents alike, the experts added.

They spoke to TODAY after some parliamentarians suggested implementing taxes targeting the wealthy to protect meritocratic ideals and to guard against the effects on how wealth accumulated in one generation can be passed down to the younger generation, giving the beneficiaries a leg-up in opportunities. 

The suggestions by the Members of Parliament (MPs) came just two months after Deputy Prime Minister Lawrence Wong made tax adjustments during Budget 2023, which included higher incremental taxes on cars and properties in excess of certain value tiers.


Nominated MP Raj Joshua Thomas suggested on Monday (April 17) that the Government impose a tax on inherited residential property valued above S$5 million.

The proportion taxed should be higher for more expensive properties, going up to 25 per cent for Singaporeans and 35 per cent for foreigners, broadly in line with current Additional Buyer's Stamp Duty (ABSD) rates for purchase of private properties, he said.

However, experts said that while this suggestion might sound attractive, the cons outweigh the pros.

Mr Vikna Rajah, partner and head of tax at law firm Rajah and Tann LLP, said that the revenue from such a tax may not be significant.

Mr Rajah noted that the increase in stamp duty announced during this year’s Budget is expected to collect another S$380 million a year — which is significantly more than the S$75 million collected yearly on average from Singapore’s previous estate tax for the wealthy.

In 2008, the country had abolished its estate tax — which includes a deceased person's assets such as cash and properties — due to low tax revenue collected and to attract entrepreneurs to relocate to Singapore, which the Government said would benefit society as a whole. 

“So I don’t think an inheritance tax is a wise move,” Mr Rajah said.

He added that an inheritance tax as suggested by Mr Thomas “will be quite easy for families to plan around by gifting their properties to the next generation during their lifetime".

“Even if you take into account the increase in property value and therefore the proportional increase in inheritance tax, clients are a lot more sophisticated now and it will be too easy (for them) to plan around (the rules).”

Mr Nicholas Mak, chief research officer of property technology company, agreed that one way to avoid an inheritance would be for families to give the property to their children before their death.

“If it's the child’s first property, they already avoid paying ABSD,” he said.

Beyond these challenges, economist Walter Theseira from the Singapore University of Social Sciences said that an inheritance tax could also have unintended negative political repercussions.

“In countries where there are inheritance taxes, surveys consistently show that middle-class residents have the incorrect impression of that tax,” Associate Professor Theseira, a former Nominated MP, said.

“For example, many middle-class voters in the United States believe that an inheritance tax will affect them when it actually does not… so because there is poor understanding (of inheritance tax), there would be very little political support for these new taxes.”

He said that while attempts could be made to make clear that any inheritance tax is on high-value properties, the misconception that the everyday person would be affected can be “pervasive”.

“Even with this proposal, we already see Facebook comments questioning why (people) need to pay an inheritance tax on a Housing and Development Board flat.”


On the suggestion by Mr Seah Kian Peng, MP for Marine Parade Group Representation Constituency, to tax the rich in specific expenditures such as super cars, country club transfer fees and Good Class Bungalows (GCBs), Assoc Prof Theseira said that this is an “attractive” idea.

“As the value of these things go up due to tax, the value to the consumer also goes up. And this is because super cars, country clubs and GCBs are all examples of goods where their values are dependent upon exclusivity,” he added.

“These buyers may not be happy to spend more, but they also know it becomes more certain when somebody owns that GCB, they are part of the elite.”

Overall, though, he said that the Government is likely to be cautious in mandating taxes on luxury goods.

“This might become a question of what is a luxury good. If you go to (the supermarket) and look at just the rice section, that is a necessity but then you think about Japanese (short grain) rice. Do we then tax that?

“It may raise more revenue, but you spend a lot of resources trying to decide what should or shouldn't be subjected to this tax.”

Mr Seah had also suggested creating a new Certificate of Entitlement (COE) category for cars costing more than S$1 million.

However, CarTimes Automobile's managing director Eddie Loo said that this suggestion is unlikely to level the playing field in Singapore for people because the “super-rich are already very heavily taxed" and a new COE category "would thus do little to impact the rich if they purchase a super car".

Instead, to better level the playing field, Mr Loo suggested creating a separate classification for Category A cars.

“It is very unfair for a Honda Hybrid to have to compete with a Mercedes-Benz A180 in Category A. Prices are at a record high now. This is a big disadvantage for people who actually need a car when small cars have to compete with luxury cars,” he said.

This could mean classifying non-luxury cars such as the Honda Hybrid produced for the mass market into a separate category.

Mr Rajah the lawyer makes a slightly different suggestion.

“(Limiting) the open category to non-luxury cars and to have another category of luxury cars does seem like a suggestion the Government could consider,” he said.


Tax experts and economists said that in considering imposing any new form of wealth tax, Singapore will have to be mindful of the impact on its attractiveness as a place for the rich — both Singaporeans and foreigners alike — to live, work and play.

"if you make it too costly for certain people who are quite globally mobile to live in Singapore, then they might choose not to live here, and then you might lose out on the opportunity to tax them at all, or to tax their consumption, and you certainly lose out on their contribution to the economy," Assoc Prof Theseira said.

Agreeing, Ms Sabrina Sia, a global employer services leader at auditing firm Deloitte Singapore, said that Singapore’s individual tax reporting regime is relatively less complex compared to other tax jurisdictions that impose taxes on wealth and capital gains.

"This is one of the plus points for foreign talent and investors coming into Singapore,” she said.

“If our tax disclosure regime becomes a lot more complex due to the imposition of such taxes, this may become an impediment for the inflow of funds and investments into Singapore from high net-worth individuals.

“While we seek to enhance progressivity in our tax regime and preserve our social compact by ensuring that those who have more will contribute more, it is also important to ensure that taxes imposed on the wealthy do not impede investments or discourage the inflow of funds into Singapore.”

Related topics

tax meritocracy wealth tax

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