S’pore to ensure higher earners pay more tax

SINGAPORE: Singapore will ensure its tax system is based on “solid” economic performance and the principle that higher income earners pay more, said a senior government official, after the city-state’s prime minister signalled that the nation needs to prepare for tax increases.

“It must be all based on solid economic activity,” said Indranee Rajah, senior minister of state for law and finance on Tuesday.

She said Singapore’s economy is “absolutely” in such a state now. Its growth reached four-year high of five per cent in the third quarter, according to a survey.

Prime Minister Lee Hsien Loong said this week that this year’s growth could exceed three per cent, higher than projected.

While she declined to comment on any specific changes to the goods and services tax (GST) that the government might be considering, Rajah said Singapore’s tax regime is backed by the principles of diverse revenue sources, a progressive system based on income and economic growth.

The GST system has been designed accordingly, she said.

The broad nature of the GST and the “offset packages” to assist lower-income residents with the consumption tax demonstrates how the system meets those principles, said Rajah.

Economists have identified the GST as one levy that Singapore could raise, as the city state balances the need for more revenue, maintaining its competitiveness, and concern that a tax increase could crimp household budgets.

Rajah named e-commerce as an area that would allow Singapore to diversify its tax base. Bloomberg