“Simply put, high income earners will be confronted with a multiple whammy of tax increases in the coming years (e.g., personal income tax, property tax, ARF for luxury car and GST). As such, some negative wealth effect on consumption of luxury goods and property investment is to be expected,” says DBS Group Research economist Irvin Seah.
Analysts are mixed on the impact on consumer spending after Finance Minister Lawrence Wong announced the higher tax rates for personal income, property and luxury cars during Budget 2022 on Feb 18.
Beyond the higher personal income tax rates, luxury car buyers would have to pay a higher additional registration fee (ARF) of 220%. In addition, property taxes will also be raised, with the changes rolled out in two phases over the next two years.
