Update on Wealth Tax

Further to our previous posts on the much speculated wealth tax, the recently announced 2018 Budget ended up without too much of an impact on our FIRE plans. You can read up on the highlights in this ST news article.

From our perspective, the key items relevant to SippingCoconut’s FIRE plans are:

• an increase in GST by 2% over the next 5-7 years;
• GST on e-services to be introduced; and
• 1% increase in residential buyer stamp duty for the portion above S$1 million.

Because we don’t really shop or consume that much, the impact of the higher GST will be something that we can absorb into our existing plans. The higher buyer stamp duty would have a slight impact if we were to purchase another property, but again that’s a discretionary investment decision.

As of now, there no introduction of wealth tax in the form of capital gains tax, taxes on dividends nor taxes of net wealth. These kind of taxes would have a major impact on our FIRE plans, increasing our magic number substantially, so in a way the pain is deferred to future years. 🙂 Having to bump up our Magic Number by 33% would not be very fun…

I also mentioned in the Taxes taxes post that it probably would have a major impact on SG’s competitiveness as a wealth management hub so the government probably decided that it would be better to retain that industry than impose a wealth tax just to see the tax base shift overseas.

Conclusion

Move along…nothing to worry about for now. 🙂

The higher GST can be easily mitigated by being fabulously frugal and by minimising your spending. You may also be eligible for the GST Voucher scheme to lighten the load. In the meantime, keep saving and investing!

Do comment below to share your thoughts on the 2018 budget. Is the 2% GST increase justified or not in view of the huge budget surplus?