An estimate by Credit Suisse suggests that the top 20 percent of income-earning households in Singapore owns about 73 percent of Singapore’s wealth. Meaning that ,the remaining 80 percent of income-earning households as well as households with no income share less than 30 percent of Singapore’s wealth.
What’s even more shocking is that in 2019, while there were 207,000 millionaires in Singapore, there were more than 700,000 people with less than S$13,500 to their name. This highlights just how large the wealth gap in Singapore is.
Causes of wealth inequality
While the average Singaporean relies greatly on their labour income, the rich in Singapore gain a large part of their total income from their capital income. This includes, but is not limited to, rental income from their tenants, interest from banks and dividends on the shares they own.
Without taxes on inheritance, dividend pay-outs and interest, the rich in Singapore get by with close to no tax being imposed on their capital (only their property and rental income are being taxed very lightly). Furthermore, the Goods and Services Tax (GST) is imposed on everyone equally for their consumption, whether they are rich or poor.
With our Budget 2019 failing to impose new taxes on wealth nor increase the few existing wealth taxes, it is not shocking that the huge wealth gap continues to persist in Singapore.
Taxes are meant to reduce income and wealth inequality by redistributing wealth and income across the country. However, in Singapore, the failure to tax capital income ends up working against those of us who rely on nothing but our labour for an income. In fact, some of the rich in Singapore might actually be paying a lower effective tax rate than those in the upper middle class.
Impact of wealth inequality