Higher Taxes in This Year’s Budget?

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Rumors have been abounding that goods and services tax (GST) will be raised when the yearly budget is released on February 19. However, in all likelihood, other taxes will be raised as well. Due to the rising costs of healthcare and retirement because of a quickly aging population, the government is in need of higher taxes from other sectors.

For example, just like other Southeast Asian countries, Singapore is now dealing with how to regulate taxes on online establishments, in comparison with taxation on actual retail stores. Maybank Kim Eng Research senior economist, Chua Hak Bin, says that Singapore needs to act on this quickly, since increasing goods and services tax would increase the advantages online retailers have over brick and mortar stores even further.

An economist from United Overseas Bank Ltd. in Singapore, Francis Tan, agrees with the need for taxes on online stores, considering that the number of Singapore’s online shoppers grows by double digits yearly. Indranee Rajah, Senior Minister of State for Law and Finance, has said that the law concerning taxes on online shopping is overdue, since online shopping habits are changing rapidly. At present, if online purchases are less than S$400, these purchases are tax-free.

The second sector that may see an increase in taxes is estate tax. While taxes on the assets of people who passed away after February 15, 2008, were removed, these estate taxes might still be reinstated, according to the head of economics and strategy at Mizuho Bank Ltd., Vishnu Varathan. This is because this particular tax is in sync with the government’s push toward making sure all fees are equitable, as well as broadening the tax base.

Aside from a levy on online stores and estate tax, the government may yet increase corporate and personal income taxes. Singaporeans currently enjoy income tax rates that are among the lowest around the globe. With only 22 percent income taxes on the highest wage earners in the country, this rate is relatively low, when compared to 34 to 36 percent in Europe, Latin America, and North America, as well as 30 to 34 percent for the rest of Asia. It’s possible that Singapore’s taxes will increase without lowering competitiveness.

The country also ranks number two in the World Bank’s category of  ease-of-doing business index. It is also number seven in the sub-category of“paying taxes,” three slots ahead of Hong Kong, the country’s competitor.

However, as the US lowers its own tax rates, and with global tax competition on the rise, higher income and corporate taxes are still uncertain. “There is increasing competition in the global arena. We must continue to develop and strengthen our competitive advantages, by maintaining our pro-business environment and building on our connectivity to the global markets and our strong links” to Southeast Asia and Asian economies, said Finance Minister Heng Swee Keat.

Mr. Heng has been silent on whether corporate or personal income taxes will be raised.

The fourth sector that may see a rise in taxes this year is digital currency. The managing director of the Monetary Authority, Ravi Menon, has only said so far that government regulations on cryptocurrencies are currently related to illegal financing, warning that these currencies do carry an investment risk. Other agencies are looking toward how to impose taxes on these digital currencies.  A partner and financial services tax leader at Ernst & Young Solutions, Amy Ang, says that the Inland Revenue Authority must determine whether cryptocurrencies should be considered a commodity to be taxed or a commodity derivative, “given the proposed statutory definition that it is a digital representation of value where the underlying asset is a virtual commodity.”

42 COMMENTS

  1. Very bad of them to increase GST because it taxes the lower income more because the lower income people spend a higher portion of the income. They should increase the property tax of second and subsequent properties of residents and businesses because these properties are more for investment of excess wealth

  2. Another wayang article to justify that they need to raise tax! Increase GST is pro business? Sky high rental is pro business? Lowest personal and corporate tax in the region??!!! We are taxed the highest in the region!!! All those indirect tax like GST, COE, ERP and CPF together with personal and corporate tax rate, thru have the cheek to say we have the lowest tax in the region. What a sad joke!!!!

  3. Really no logic. It has been decades since the advocation and implementation of “pro-business” “pro-connectivity” and what not leading to massive influx of fts here. So what has all these “pro” done to help us ?? Obviously not achieving its objectives. So why still flogging a very dead horse ??

  4. No point KPKB just Leelax and take the poison medicine and enjoy the Swiss standard of living…do more exercise collecting cardboard, cleaning toilets, and clearing/cleaning tables at hawkers centre!!! Or sing, and sell tissue paper at MRT stations reserved specifically for beloved sickarpoorean!!!

  5. How many citizens are getting handsome bonus? Largely it’s gone. Good enough if you get 13th month. Even luckier if you hold to your job. Given this situation, would any wise government increase tax? This guys are going to ruin the whole country, just as they ruined MRT. Sinkaporeans are likely to pay heavy price for their stupidity.

  6. The easiest way to fix a failing economy is to increase direct and indirect taxes. They say the additional tax is because of an aging population. Population will age and what has it got to do with taxes. We have all paid of our medical expenses forward when we contribute to CPF Medisave, we have all been covered with insurance. If we get 100% susidy than I will say go ahead and increase taxes. But that is not the case. These dumb ass is try to pull a fast one. Reduce Ministers pay will surely not require further increase in taxes.

  7. Progress is important to keep up with competition but when it is done at the expense of many who cannot cope and keep up, who don’t enjoy any benefits of wealth growth and to see this as a sacrifice the nation has to make is immoral and criminal. Gain in wealth must not bring about the loss of humanity and more suffering for the poor and destitutes.

  8. Global Competition Vs Higher Taxation.

    Global competition Vs Global protection Fee

    Global Competition Vs Global Alternative Resources.

    Global Protection Fee Vs Outsource Global Alternative.

    Higher Taxation Vs Bad Global Alternative

    Where do you think went wrong?