Reform Party chief Kenneth Jeyaretnam has rejected his former schoolmate, Finance Minister Heng Swee Keat’s claims that Singapore’s tax system is a fair and progressive one, calling such a statement “ludicrous” and an “Orwellian charade” in a blog post this past Thursday:
“Heng studied economics with me at Cambridge University in the early 80s. He did not get a First but he still must be able to recognize how ludicrous it is to talk of the Singapore tax system being “fair and progressive”.”
The son of the late J.B. Jeyaretnam further postulated that the Finance Minister is planning to hike the Goods and Services Tax (GST) to “compensate for” the corporate tax cut that the Finance Ministry will initiate to counter the corporate tax reduction that the US government is initiating to attract businesses to keep income within the US.
Jeyaretnam added that he expects GST to rise by a startling 10-11 per cent, if the Finance Ministry slashes corporate tax by half:
“In order to counter the US corporate tax rate cut, it is clear Heng is planning to slash the corporate tax rate to close to zero while hiking the GST rate to compensate. GST is a highly regressive tax since it accounts for a much bigger share of the incomes of the less well-off than the wealthy. The PAP alway claims that it returns the GST to the less well off in the form of vouchers but this accounts for only a small fraction of total revenues raised through GST. In 2017 corporate taxes are estimated to raise about $13 billion while GST is expected to bring in $11 billion. If Heng slashes corporation tax by 50% he is going to have to increase the GST rate to 10-11% to compensate.”
The opposition politician asserted that Heng Swee Keat will continue to claim that the Singapore tax system is a fair one even if such a scheme is implemented:
“When this happens Heng will no doubt tell Singaporeans that the tax system continues to be fair and progressive. He will present a Budget that hides just how much of a surplus the Goverment is really making and say that there is no more money for social programmes if Singapore is to avoid bankruptcy. He, like the other PAP multi-millionaire and billionaire ministers, will pretend to be in the same boat as the majority of Singaporeans. And you will believe him.”