25 November 2013
The Straits Times reported on 20 November 2013 that economists expect a more progressive tax system to emerge in Singapore in the next few years that will help lower-income earners, while ensuring higher-income earners are not overburdened. A progressive tax system is one where higher-income earners pay more taxes than lower-income earners.
This follows an earlier report where Acting Minister for Culture, Community and Youth Lawrence Wong was quoted as saying at a community dialogue on 17 November 2013 that the Government is looking at how they can have a more progressive tax system in order to preserve and uphold a fair and just society. Economists interviewed said that the wheels are already set in motion with the measures introduced in Budget 2013 and they believe the trend will continue in next year’s Budget.
Factors fuelling the move towards a more progressive tax system include increased social spending, higher outlays on public infrastructure, an ageing population and the rising income gap.
Possible measures in next year’s Budget may include:
- Further adjustments in property tax
- Higher asset tax on second and subsequent properties and cars
- Reduction in the income tax rate for lower-income brackets
- Lower income for the highest tax bracket of 20% from the current S$320,000
Economists said that raising the goods and services tax (GST) rate from the current 7% may be an option for the Government to raise additional revenue in future. However, this has to be complemented with more generous rebates to lower-income families as such a tax is regressive and lower-income households will be more affected.
Source: The Straits Times