According to the National House Buyers Association, an inheritance tax, which is expected to be proposed in the 2025 budget, would be unjust to property owners, particularly those who have invested in real estate for future generations.
The potential introduction of an inheritance tax has sparked widespread debate among economists, policymakers, and the general public. Proponents argue that such a tax could help reduce wealth inequality and generate additional revenue for the government. However, critics contend that it could have unintended consequences on family wealth preservation and economic growth.
According to HBA honorary secretary-general Chang Kim Loong, property accounts for the majority of most people's wealth or estate, particularly parents who want to give their children a better start in life.
An inheritance tax is thought to be one of five new levies suggested for the 2025 federal budget, which will be tabled this month. It would be charged on assets or wealth inherited by beneficiaries following a person's death.
The proposed inheritance tax comes at a time when many countries are grappling with rising income inequality and the need for increased government revenue. Supporters of the tax argue that it could help level the playing field and provide funds for social programs. However, opponents worry about the potential impact on family businesses and long-term economic planning.
Chang stated that the proposed tax would be based on the estate's projected current market worth. As property values grow over time due to inflation, beneficiaries of such assets are effectively paying a tax on the inflation rate experienced since purchasing the property, he stated. The tax may encourage people to spend rather than invest since it punishes those who have achieved success.
Financial experts have expressed concerns about the potential ripple effects of an inheritance tax on the real estate market. Some predict that it could lead to a sell-off of properties as beneficiaries struggle to pay the tax, potentially causing a downturn in property values. Others worry about the impact on small businesses and farms, which often form a significant part of family inheritances.
Inheritance tax is effectively telling civil society not to work so hard or save money for investments, but rather to live a carefree lifestyle and spend everything we earn because we will be taxed again when we die for any assets accumulated through our years of blood, sweat, and tears, he said.
As the debate continues, policymakers are faced with the challenge of balancing the potential benefits of an inheritance tax with its possible drawbacks. Some experts suggest exploring alternative measures, such as closing existing tax loopholes or implementing a more progressive income tax system, to address wealth inequality without potentially discouraging long-term savings and investment.
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