Wealth Tax Systems Needed in ASEAN
By Ian McIntyre
April 2025 FEATURE
THIS YEAR, Malaysia chairs the Association of Southeast Asian Nations (ASEAN). But ASEAN is not just about government-to-government ties, neither is it just about integrating economics nor playing competitive sports, or promoting cultural, arts and heritage.
It is a growing platform for people-to-people amalgamation and champions the goals of sustainability and equitable distribution that civil society in the region has been advocating for the past five decades. In a world riveted with uncertainty from climate change to harsh geopolitics and extremism to economic stagnation, the synergy within ASEAN is more important than ever before.
While ASEAN navigates bureaucracies and its geopolitical burden, worsened by the strife in Myanmar, NGOs have, in some ways, taken the lead to integrate the region. Regional NGOs such as Asian People's Movement on Debt and Development (APMDD) and Global Alliance for Incinerator Alternatives (GAIA) have cemented strong ties across the region. APMDD, for example, is at the forefront of incorporating “wealth tax” in the respective budgets of ASEAN members.
Singapore is a good reference point. When addressing the 35th Singapore Economic Roundtable, then-Singapore Minister for Finance, Lawrence Wong (now the Prime Minister), emphasised the need to guard against rising inequality and for fiscal resources to tackle such challenges. He noted that an important element of a progressive tax system is to consider not just a person’s income, but also their accumulated wealth.
In its purest form, wealth taxes are recurrent taxes on a broad range of an individual’s movable and immovable properties, and their net of debts. They are separate and distinct from taxes levied on income generated by assets, e.g. capital gains taxes, taxes on transactions involving immovable properties, stamp duties and property tax as well as inheritance or estate taxes, which are only levied when wealth is inherited.
One of the main arguments against wealth taxes is the concern for capital flight—the risk of wealthy individuals relocating themselves or their capital or assets to avoid being taxed. In hindsight, wealth taxes have also been criticised on the basis that they are imposed irrespective of the actual returns generated by the assets. Therefore, a net wealth tax can potentially penalise the owners of low-return assets and favour the owners of high-return assets.
APMDD coordinator Lidy Nacpil, a veteran civil activist from the 1980s, is relentless on the fight to impose wealth tax, citing that data obtained revealed that the rich are getting richer and the poor, well, poorer. “Wealth taxation is a practical necessity.”
In 2022, taxes on goods and services— such as VAT, GST, and sales and excise taxes—made up an average of 48.8% of government revenues in Asia-Pacific countries. This is significantly higher than the 31.9% average in developed countries. The heavy reliance on regressive taxes in Asia puts an unfair burden on workers, farmers, women, youths and other vulnerable groups, often with little benefits in terms of public services or improvements in living and working conditions.
“It is high time the region puts an end to inequality and push for more progressive taxation,” she argues, adding that while there might not be a uniform wealth, a progressive one in line with the national conditions of each regional nation is needed. Now, there is also a need to tap into cybercurrency and trade occurring online through e-commerce, online transactions and fintech. Then, there are scams which have burgeoned into a multi-billion dollar illicit industry.
Nacpil is motivated by the situation in the Philippines, where the worsening state of climate emergency and continuing crises in public financing are exacerbating poverty and inequalities, impacting the government’s ability to deliver its human rights obligations. The Department of Social Welfare and Development estimates, for example, that more than 2.3 million people, or over 630,000 families, were affected by typhoons last year.
During the height of the Covid-19 pandemic, the demand for taxing the rich and not the poor gained popularity, she noted. APMDD has organised a public forum on championing “wealth tax now”, which gained traction after some academics lent their voices to the cause.
One of Nacpil’s associates in Malaysia is former Klang Member of Parliament, Charles Santiago, who echoes the need for some form of wealth tax in Malaysia. “It may even curb corruption, since ill-gotten wealth can be traced and then taxed even in cases where the prosecution finds it difficult to acquire the evidence.” Santiago said that the tax would only impact the “ultrarich” with assets exceeding RM100mil, not the aspiring middle class. He had previously proposed that the country’s top 50 wealthiest individuals be charged a 2.5% wealth tax, adding that it is only fair and just for these beneficiaries of public support to contribute back to society.
Economist Goh Lim Thye has, however, reportedly cautioned that a wealth tax requires careful planning and a robust asset valuation framework to avoid underreporting.[1] Goh was quoted saying that this was a problem Argentina initially faced when it introduced the tax in the 1990s, as it struggled with the valuation of offshore assets. However, the government could counteract this form of tax evasion by negotiating bilateral agreements on tax information exchange and global asset reporting.
At the beginning of this year, Thailand’s Finance Permanent Secretary Lavaron Sangsnit announced that implementing a wealth tax is becoming more feasible due to the ability to monitor the assets of the country’s richest citizens, including those held in foreign countries, brought about by Thailand’s membership in the international tax information exchange network.[2] Can Malaysia follow suit?
Bank officer Bernard Lim related that the problems faced by the working class is mounting, especially in Penang, due to the escalation of living costs post-pandemic. “It is time for a profound measure to be introduced to address the growing divide between the rich and the poor,” he said.
Footnotes
Ian McIntyre
is a veteran journalist with over 25 years of experience reporting from mainstream and alternative media. He subscribes to a belief that
what is good for society is likewise beneficial for
the media.
