The Government has served notice that it is increasing personal taxes to ameliorate its coffers and that those earning higher wages should pay more.
Inspite of the slowing economy, the Government has chosen this time of the year to announce the impending increase in personal taxes. While Singaporeans are a practical people and may grudgingly agree to this sentiment, the government should be mindful of the tax quantum to be imposed on high wage earners.
High wage earners should not be made to pay exorbitant taxes as those found in European nations where taxes range from 30 to 40 to 50% of one’s personal income and yet food cost and the cost of taking public transport remain high.
As a rule of thumb, the government should work out its needs for the next 2 to 3 fiscal years to address this immediate shortfall to pay for big ticket expenditure such as building new infrastructures like the High Speed Rail terminal at Jurong, the deep sewerage tunnel, the new Lakeside Central Business District or even a new T5 airport terminal.
This additional stream of tax revenue should be channeled to a sinking fund account to pay for these development projects. It makes sense for Government to set new budgetary rules by mirroring the Building Maintenance and Strata Management Act by opening a sinking fund account for these extraneous expenses. The sinking fund should collect enough only for these superstructures.
It should not work out a tax system to cover for all and sundry for the next 15 to 20 years. To future tax it’s citizens is to place an extra burden on its people and this may lead to a brain drain or depress the procreation needs of its people due to the onerous burden of feeding and clothing their young.
The Government should also use a higher portion of the income from our sovereign wealth funds, our government-linked company contributions, gaming, entertainment and cess taxes to augment these infrastructure costs.
The last thing which the Government wants is to make its senior citizens feel that it is being tight wad. Income derived from our sovereign wealth funds should be disbursed more generously to see them into their golden years. After all, they are the ones who have contributed much to the funds enlargement through their years of work and toil.
Reader’s contribution by Gilbert Tan