Singapore studying how to expand wealth tax system as it relooks fiscal strategies: Lawrence Wong – CNA

Singapore also has a progressive taxes and transfers system, the minister said, pointing to how the country has always maintained ahigh level of transfers to the lowest-income households.

Households in the bottom 20 per cent income bracket receive about S$4 in benefits for every dollar of tax paid, he pointed out in his speech.

The ratio is around 1:2 for middle-income households, while households in the top 20 per cent of income receive S$0.30 in benefits for every dollar of tax paid.

Our taxes and transfers system today is progressive, and we will keep it that way, said Mr Wong.

For the middle-income, we maintain a low tax burden so that they can enjoy the rewards of their hard work and have the freedom of choice in their expenditures.

Mr Wong added that unlike many European countries thatimpose hefty income taxes to support their welfare systems, Singapore has kept its public expenditure lean yet effective.

That is why half of the countrys working population do not have to pay personal income taxes, while the Goods and Services Tax (GST) rates are where they are today, he said.

"Going forward, we will need to raise revenue to fund our additional expenditure. But we will also move forward carefully to make sure that overall public spending remains effective, and that taxes remain as low as possible for the middle class, the minister said.

The Government first announced plans to raise the GST rate from 7 per cent to 9 per cent in Budget 2018. Earlier this year in Budget 2021, Deputy Prime Minister Heng Swee Keat said the hike will take place between next year and 2025, and sooner rather than later depending on the economic outlook.

Delving into why the Government is looking to increase the GST, Mr Wong cited how Singapores healthcare needs alone will demand an additional 3 per cent of gross domestic product in spending over the next 10 years.

Including the need to invest in reducing emissions, providing quality education and maintaining security, the countrys needs are significant and growing.

Some of these can be borne through income taxes. But with rapid ageing, it will not be sustainable and will make it hard for our working population, said Mr Wong, adding that raising tax revenue is the sustainable and responsible way to fund recurrent expenditures.

(The GST) is a tax on final consumption, and it helps to smoothen the burden of taxation across the entire population young and old, and including tourists and foreigners when they spend money here.

Mr Wong added that Singapore is not alone, with many other jurisdictions having much higher GST or Value-added Tax (VAT) rates than Singapore.

Asked how the flare-up in inflation globally will influence the timing of the GST hike, the minister replied that the Government will consider the overall economic outlook, including the outlook on inflation, when it makes its decision.

But he stressed that the planned GST hike shouldn't be looked (at) in isolation, given that the Government hadpreviously announced the roll-out of a S$6 billion Assurance Package.

We have already set aside monies for this Assurance Package. Money is there so when GST is introduced, it will come along with the Assurance Package which will effectively delay the GST increase by about five years for majority of Singaporeans, the minister said during a dialogue session moderated by The Straits Times associate editor Vikram Khanna.

And for the lower-income Singaporeans, it will delay the GST increase effectively by 10 years.

Adding that the permanent GST Voucher scheme will also be enhanced, Mr Wong said: So look at it holistically, GST in Singapore is quite unique compared to almost all other countries.

Originally posted here:

Singapore studying how to expand wealth tax system as it relooks fiscal strategies: Lawrence Wong - CNA