Mar 2, 2012 - ST Forum
MP DENISE Phua (Moulmein-Kallang GRC) proposed an increase in
income tax rate for top earners to help pay for increased social
spending ('Tax rich more to fund social spending'; Wednesday).
In my view, we should focus on another aspect of tax policy: the
absence of a tax on investment returns.
We should take a leaf from multi- billionaire American investor
Warren Buffett's book. He advocated taxing his wealthy peers,
arguing that the rich pay less tax because their capital gains are
taxed at only 15 per cent in contrast with an income tax rate of 30
per cent.
According to him, such a tax policy has resulted in the absurd
reality of someone so wealthy like him enjoying a lower tax rate
than his office staff.
The general trend is that the wealthy derive a far greater
proportion of their earnings through investments, as compared to
the less well-off.
This is for the simple reason that they have more savings and
hence the capital to invest.
In Singapore, capital gains as a result of personal investments,
such as stocks and property, are not taxable.
Introducing a capital gains tax will ensure that everyone pays a
fair tax on all his income, regardless of the source of the
income.
This will provide a substantial amount of Budget revenue to fund
the social and productivity initiatives.
Xing Yun
