Singapore is facing the issue of wealth polarization ahead of next month's general elections. Prime Minister Lawrence Wong is struggling to find a balance between attracting the wealthy and supporting the common people.
According to foreign media, including Bloomberg News, on the 28th (local time), the Singapore government is seeking measures to address rising economic discontent ahead of the general elections on May 3. Prime Minister Wong and the ruling People's Action Party (PAP) have been implementing various policies to regain public sentiment after their vote share decreased in the 2020 elections, aiming for a voter turnout of over 60% in this election.
In particular, the key issues in this election are wealth polarization and the alleviation of living costs. According to UBS, average assets in Singapore have increased by 116% since the 2008 financial crisis, while median assets have decreased by 2%. The gap in assets between the upper class and the middle class has widened sharply.
Soaring prices are also fueling citizen discontent. For example, the price of one Toyota Corolla has reached 200,000 Singapore dollars (approximately 150 million won), and even subsidized public housing exceeds 1 million Singapore dollars (about 110 million won) in the second-hand market.
The government has been raising the highest income tax rate from 22% to 24%, increasing acquisition taxes on luxury real estate and vehicles, thereby heightening tax burdens. Prime Minister Wong assessed that these policies have contributed to alleviating asset inequality, but there are indications that actual improvements felt by citizens are still insufficient.
However, there are limits to imposing punitive taxes on high-income earners. If their outflow accelerates, it would be difficult for the Singapore government to avoid financial losses. Some asset holders are already considering moving to the United Arab Emirates (UAE), such as Dubai or Abu Dhabi, where the tax burden is lower, making it challenging for the government to announce additional tax increases. Previously, the United Kingdom also faced risks of capital outflow when it limited tax benefits for high-income earners.
In this situation, Prime Minister Wong is continuing efforts to find a compromise. Last year, in his first budget after taking office, he strengthened support for the middle class by expanding supermarket vouchers, discounting public utilities, and offering income tax refunds instead of imposing additional 'wealth taxes.' Additionally, he showcased traveling on the low-cost airline Scoot to promote an accessible image. Prime Minister Wong has also emphasized to the public through his YouTube channel that 'pursuing dreams is more important than status or compensation.'
However, Prime Minister Wong's appeal is not easily resonating with the public. Bloomberg News analyzed that the culture in Singapore still deeply roots the '5C (car, condo, credit card, country club, cash)' as a measure of success.