A delicate balancing act

 
How might Singapore strike a balance between ensuring a sustainable fiscal system and maintaining a progressive and internationally competitive tax structure?

RELATIVE to other advanced economies, Singapore’s income and corporate tax rates are lower than the global averages, and I believe they should be maintained as such especially at a time when the neighbouring economies are getting more competitive.

Raising the Goods and Services Tax is one obvious way to increase revenue, as GST is one of the top contributors to Singapore’s revenue. There is talk about adjusting the GST system and I expect the rate to be raised in the next few years. However, this should be carefully calibrated and timed to take effect only when the economy has improved; otherwise it will cause too much strain on the general population especially the lower income group.

The new carbon tax wef 2019 is progressive and not surprising given the country’s push towards a “car-lite” society.

Going forward, what could be interesting and certainly progressive is perhaps implementing a sugar tax that several countries such as Mexico have enacted. Theoretically, this should reduce consumption of high-sugar food and drinks that contribute to the proliferation of diseases such as diabetes. Hopefully, this would also help assuage the strain on the healthcare system.

Ronald Lee
Managing Director
PrimeStaff Management Services Pte Ltd