Did you know that 17% of Singapore’s 5.3 million population are millionaires? In fact, Singapore now has the highest proportion of millionaires in the world and almost half of Singapore’s top 10 richest people listed on Forbes are involved in the banking/finance industry!
Over the past 20 years, Singapore has become a hotspot for rich people due to its friendly tax model. Both local and foreign millionaires have long benefited from generous tax breaks and very low tax levies on capital gains, inheritance, and profits made from overseas transactions and assets.
This is precisely why Eduardo Saverin, co-founder of Facebook, renounced his US citizenship to move to Singapore, allowing him to avoid paying 40% of income tax!
Last year, research by Astbury Marsden showed that almost a third of UK investment bankers would prefer to work in Singapore; “a fast-growing, low-tax and bank-friendly environment like Singapore stands as a perfect antidote to the comparatively high tax and anti-banker sentiment of London and New York.” (Mark Cameron, Chief Operating Officer at Astbury Marsden).
Robert Half, a finance recruitment firm, shared a 2012 salary guide in the banking and financial services, averaging at about 300k to 500k per annum for an analyst role!
Much like other parts of the world, Singapore is starting to look for ways to get those that earn such astronomical incomes and enjoy such fiscal advantages to contribute to the country’s overall prosperity.
Philippe Lamberts, European MP, has recently succeeded in imposing a strict bonus cap on the pay of Europe’s top financiers and traders.
Unsurprisingly, the measure wasn’t well received: as a commercial property developer posted in a forum, “If I was a banker, I’d move to Singapore.”
So what does this mean for Singapore? How can we ever hope to reduce increasing inequalities if those in the best position to share at least some of their amassed capital aren’t willing to help those that do all the dirty work?
How can the government convince them to help out without being scared off by policies that could be seen as “punishing’ the rich”?
It was discussed in Parliament that more tiers should be put in place to increase the tax of high earners – up to a maximum of 25% – so that they contribute more to Singapore’s public funds without putting too much of a financial burden on their earnings (currently, those earning more than $320,000 per year pay a flat rate of 20% in taxes).
This is a very complex issue that will make headlines for the next few years: not only will the government have to come up with a way to make rich people feel welcome while instilling in them a sense of duty towards Singapore citizens, it will also have to help low earners rise above the rising costs of living that are partly created by the very presence of the rich…
Talk about a conundrum!
(Living the high life is quite troublesome actually)