Home » World » Why Is S’pore So Determined To Raise GST? It’s The Best Way To Tax The Rich Amid Inflation

Why Is S’pore So Determined To Raise GST? It’s The Best Way To Tax The Rich Amid Inflation

Why Is S’pore So Determined To Raise GST? It’s The Best Way To Tax The Rich Amid Inflation

Disclaimer: Opinions expressed below belong solely to the author.

On the face of it, raising consumption taxes when global inflation is out of control appears to be crazy. But is there a method to this madness? In Singapore, surprisingly, there is.

Hug the rich

Singapore is ranked the top three most attractive destinations to High Net Worth (HNW) individuals, with about 2,800 of them expected to relocate to the city-state this year, trailing behind United Arab Emirates and Australia.

The wealthiest 10 per cent of local taxpayers are already responsible for 80 per cent of the income tax receipts and the top 20 per cent, along with foreigners, pay over 60 per cent of GST annually.

Source: Heng Swee Keat, 2021

Given how shaken the economic situation and budgetary balance have been by the pandemic, and the incoming spending demands of an ageing society in the next decade, the government has to find new sources of revenue, despite growing reserves and returns on them.

Because, unlike in most other countries, it cannot borrow money to finance budgetary expenses. It has to be extra frugal, but also extra careful about where it draws money from. Taxing businesses and the wealthy too much may chase them out of the city altogether, leaving them with a Singaporean tax bill of $0.

Another issue is that taxing income of the rich is still particularly ineffective (despite the fact they already are contributing the most). The reason is because they have plenty of vehicles of tax avoidance, which will reduce their liabilities to Singaporean budget. The old adage is, after all, that the rich pay as much in taxes as they want to.

Similarly, taxing wealth — something that certain parliamentarians in Singapore have proposed — is even worse, because there’s no credible way of…

See also  Ram-raids continue as fuel station targeted - World news

Read full article on worldnewsera.com