Measuring capital gains

Is there any official data on the total income of individuals in Singapore, including salaries, wages, interest, dividends and capital gains from the sale of properties, shares and financial instruments? If not, how does the government determine the total income of individuals in Singapore for the purpose of measuring the true income and wealth distribution among the population?

This is my speech in Parliament on 11 March 2013 during the Committee of Supply debate for the Ministry of Finance.

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It is common for high income earners to earn much more from capital gains and other investments than from their wages and salaries. In the United States, where income inequality is almost as high as Singapore’s, economist Joseph Stiglitz has pointed out that salaries and wages account for only about 9% of the income of the top 400 income earners; interest and dividends account for 16% and capital gains account for a sizeable 57% of their total income[1].

According to a reply from the Finance Minister to my parliamentary question on 14 November 2012, capital gains do not need to be reported in Singapore since they are not taxable.

This being the case, is there any official data on the total income of individuals in Singapore, including salaries, wages, interest, dividends and capital gains from the sale of properties, shares and financial instruments? If not, how does the government determine the total income of individuals in Singapore for the purpose of measuring the true income and wealth distribution among the population?

In the absence of mandatory reporting of capital gains, could the government explore ways to require simple but accurate ways to report and collect this data?

I think these are important metrics to measure. They could help policy-makers plan more effective and progressive redistributive policies for future budgets. These can in turn help to improve the well-being of Singaporeans, while balancing the need for Singapore to remain an attractive destination to work and invest.

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[1] Stiglitz, Joseph, 2012. “The price of inequality: How today’s divided society endangers our future”, p. 72.

Tackling income inequality should be Govt’s top priority

Our national productivity drive needs to start from the top. We currently have three very senior ministers advising the PM, three ministers in the Prime Minister’s Office—two of them without any portfolio—nine ministers of state and six parliamentary secretaries, most of whom are drawing multi-million dollar salaries. Does the prime minister of such a small country really need so many advisers and ministers assisting him?

This is my response to the Finance Minister’s Budget 2010 speech.

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Income inequality is one of the biggest challenges our nation faces. The median household income in 2009 was only 71 per cent of the average income, down from 74 per cent in 1999 [see note 1]. This means that the few very high income earners are pulling up the average, while the large number of lower income earners are pulling down the median. The share of wages in GDP has declined from 47 per cent in 2001 to 41 per cent in 2006 [see note 2]. The Gini coefficient–a measure of income inequality–rose from 0.436 in 1990 to 0.478 in 2009, indicating a widening income gap.

Increasing income inequality has been shown to coincide with higher divorce rates [see note 3] and crime rates [see note 4], particularly property crime. Singapore’s wealthy elites can no longer afford to simply turn a blind eye to the plight of the poor, thinking it will not affect them–because it will, eventually.

Reducing income inequality should be the top priority of the government. This government needs to pay more than just lip service to the goal of ensuring that all Singaporeans benefit from economic growth.

Continue reading “Tackling income inequality should be Govt’s top priority”

Growth must improve welfare of Singaporeans: Sylvia Lim

Our ultimate aim of growth is to improve the welfare of all citizens. GDP is not an adequate indicator of welfare, and the government’s pursuit of growth in the recent years has had serious side-effects on the quality of life, and social cohesion.

This was the speech Non-constituency MP and Workers’ Party chairman Sylvia Lim delivered in Parliament yesterday.

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Each year, the government has certain GDP growth targets and plans the Budget and policies around it.  This year, the government has put in place a productivity target recommended by the Economic Strategies Committee.

Whatever measure is used, the ultimate aim of growing our economy must be to forge a higher quality of life for all our citizens.  Though not everyone has the same talents and capabilities, our growth must provide every person with a good standard of living and a sense of physical and economic security.   We may be a small country geographically, but within our borders, citizens should feel at home and valued as persons and not just for economic contributions. Continue reading “Growth must improve welfare of Singaporeans: Sylvia Lim”