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27 Aug 2019
Movement for change
Suggestion View - 204
Will higher income tax chase the high earners from Singapore?

I prefer that higher income earners should pay a higher rate of tax and be entitled to the same benefits as other citizens. Furthermore, GST should be abolished.

Someone was worried - will a higher rate of tax chase the high income earners from Singapore?

The answer is - No. The high income earners earn their income from Singapore. If they leave Singapore, they will not be able to earn the income. So, they cannot run away. 

What about high income earners who come into Singapore? Will a lower rate of income tax attract them to come here?

It may not be well known, but foreigners who migrate to Singapore do not have to pay income tax on their overseas income. The government does not collect any additional tax on these immigrants from their overseas income. 

They have to pay tax on their income and property investments from Singapore, but this is likely to be quite modest. 

What about attracting companies to operate in Singapore by offering a low rate of corporate tax?

If a company were to operate a manufacturing or other business in Singapore, they have to consider many factors, such as the cost of labor, rental, size of local market, etc. The rate of corporate tax is not likely to be the key factor. 

In fact, I suspect that many large multinational companies come to Singapore because they are offered special and considerable benefits, such as reduced rental for premises and access to large government grants. I do not have any evidence to back up this suspicion,  but the means adopted by the Economic Development Board to bring in the foreign investors have been non-transparent over the past decades. 

Here is my takeaway. Singapore will be better off by abolishing GST (to bring down the cost of living) and introducing a higher rate of income tax to replace it. In fact, it is reverting to the days before GST was introduced. 

The argument that a lower rate of income tax and corporate tax will encourage the high income earners and companies to come and operate in Singapore is fallacious. The argument that a higher rate of tax will chase away the entrepreneurs and top talents is perhaps also deceptive.

Tan Kin Lian

Vote - do you agree that we should abolish GST and replace it with a higher income tax for top earners?

 


Agree: 10  Disagree: 0  Vote  Comment (3)

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