Singapore's Tax System To Remain Progressive

By ExpatBriefing.com Editorial 24 January, 2012

Prior to his presentation of the 2012 Budget on February 17, Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance and Manpower has looked at how Singapore’s progressive tax policies are building “a fair and inclusive society”, during his remarks to an Institute of Policy Studies conference.

He confirmed that the government’s policy continued to be a redistribution of income in the economy. Its fiscal policies “must be progressive, which means most of the benefits being received by lower income citizens and most tax revenues being paid by those at the upper end”.

However, he said that the key question is how we do this, while ensuring that, for example, people continue to want to work hard to improve themselves. In his opinion, “it means intervening boldly to help lower income families, but focusing on the right areas,” and he professed that Singapore now has a more progressive fiscal system than 10 years ago.

“It may seem counter-intuitive,” he added, “because we lowered income taxes and raised the goods and services tax (GST), which taken on their own would have been regressive moves. But a fiscal system can only be evaluated by looking at both taxes and benefits received by the population, not either one by itself”.

“Lower-income Singaporeans now receive more benefits, even after deducting the extra GST they pay,” he continued. “Through education, work, housing and health care, we have tilted the system further in their favour.”

Shanmugaratnam also explained that the government would keep the tax burden on the country’s middle class relatively low. “That's an essential feature of our system,” he disclosed, “and we are quite different from most developed countries in this regard. Some of them have highly progressive systems - with large benefits for the poor and certain other groups, but... a high tax burden on the middle class (even after netting off the benefits they receive in return).”

Tags: Individuals | Expatriates | Tax | International Financial Centres (IFC) | Goods And Services Tax (GST) | Singapore | Individual Income Tax | Services |

 





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