Progressive taxes 'a sign of things to come'

[reporter2]

http://www.straitstimes.com/archive/...-come-20130227

Progressive taxes 'a sign of things to come'

Published on Feb 27, 2013

By Goh Chin Lian And Tessa Wong


ANALYSTS and MPs believe this year's Budget is a sign of things to come and expect the Government to continue making those who are better off pay more taxes and redistribute most of the money collected to lower-income Singaporeans.

They foresee future Budgets further increasing the newly announced higher taxes on luxury residences, investment homes and expensive cars.

The personal income tax rate for top earners may also be raised, said many of the 10 politicians and experts interviewed yesterday on Budget 2013's progressive fiscal system.

They say the pressure for the new measures comes from two fronts: Fiscally, more revenue will be needed for increased social spending to narrow the widening income gap. Politically, it will preserve a sense of fairness as the wealthy are seen to contribute more than the less well-off.

The move is inevitable, MP Liang Eng Hwa said.

As society matures, the income gap widens and spending on the the low-income group has to go up, pointed out Mr Liang, a senior bank executive who is deputy chairman of the Government Parliamentary Committee for Finance and Trade and Industry .

"To balance the Budget, we have to find other revenue sources," he added. "Also, as income and wealth disparity widens, we would expect those who have done better to help those still behind. That will help to solidify the social compact."

In Budget 2013, luxury cars will pay more under a new tiered Additional Registration Fee system. It will add about $150 million more to government coffers every year.

Higher property taxes for the top 1 per cent of owner-occupied homes and top one-third of investment homes will boost revenue by an extra $53 million.

Deputy Prime Minister Tharman Shanmugaratnam said the measures go towards preserving a sense of fairness, without hurting economic competitiveness or reducing incentives for enterprise.

Agreeing, political scientist Reuben Wong of the National University of Singapore said: "Our very open economy makes us vulnerable to drops in trade and finance flows. A progressive tax structure provides greater cushioning for the most vulnerable."

Going forward, analysts like Bank of America Merrill Lynch economist Chua Hak Bin do not rule out the personal income tax rate of top earners going beyond the current 20 per cent.

Economist Yeoh Lam Keong, an adjunct senior research fellow at the Institute of Policy Studies, said more tax bands could be introduced at the top tier with higher tax rates, without threatening Singapore's competitive tax regime compared with that in most countries. One way is to introduce more tiers in the residential property tax regime, suggested Mr Chris Woo, a tax partner in PwC, a professional services firm.

Economists like Nanyang Technological University's Chew Soon Beng, however, doubt that the latest measures will significantly reduce income inequality.

Some point out that property tax revenue makes up about 7 per cent of total tax revenue, and the increase in property tax will just be a fraction of it.

Still, the measures are part of the Government's efforts to address the widening income gap and these include increasingly tapping the net investment returns contribution from past reserves to fund various schemes, noted MP Zaqy Mohamad.

Workfare and the permanent GST Voucher are two such efforts, he said. "But this Budget has expanded it to include a more progressive tax structure."

He added: "It's also a signal of how the Government is managing the widening income gap."

[email protected]

[email protected]

[teddybear]

Really? Then its time to tax those earning more than $320k per annum more than 20%! I don't mind paying more if I earn more, however, I pity those people who don't earn anything and yet need to pay tax because of "tax on wealth" when it actually hit many middle-income laymen when they retire rather than the actual wealthy ones. Remember, they removed the real great great grandmother of "tax on wealth" scheme - ESTATE DUTY!

http://www.straitstimes.com/archive/...-come-20130227

Progressive taxes 'a sign of things to come'

Published on Feb 27, 2013

By Goh Chin Lian And Tessa Wong


ANALYSTS and MPs believe this year's Budget is a sign of things to come and expect the Government to continue making those who are better off pay more taxes and redistribute most of the money collected to lower-income Singaporeans.

They foresee future Budgets further increasing the newly announced higher taxes on luxury residences, investment homes and expensive cars.

The personal income tax rate for top earners may also be raised, said many of the 10 politicians and experts interviewed yesterday on Budget 2013's progressive fiscal system.

They say the pressure for the new measures comes from two fronts: Fiscally, more revenue will be needed for increased social spending to narrow the widening income gap. Politically, it will preserve a sense of fairness as the wealthy are seen to contribute more than the less well-off.

The move is inevitable, MP Liang Eng Hwa said.

As society matures, the income gap widens and spending on the the low-income group has to go up, pointed out Mr Liang, a senior bank executive who is deputy chairman of the Government Parliamentary Committee for Finance and Trade and Industry .

"To balance the Budget, we have to find other revenue sources," he added. "Also, as income and wealth disparity widens, we would expect those who have done better to help those still behind. That will help to solidify the social compact."

In Budget 2013, luxury cars will pay more under a new tiered Additional Registration Fee system. It will add about $150 million more to government coffers every year.

Higher property taxes for the top 1 per cent of owner-occupied homes and top one-third of investment homes will boost revenue by an extra $53 million.

Deputy Prime Minister Tharman Shanmugaratnam said the measures go towards preserving a sense of fairness, without hurting economic competitiveness or reducing incentives for enterprise.

Agreeing, political scientist Reuben Wong of the National University of Singapore said: "Our very open economy makes us vulnerable to drops in trade and finance flows. A progressive tax structure provides greater cushioning for the most vulnerable."

Going forward, analysts like Bank of America Merrill Lynch economist Chua Hak Bin do not rule out the personal income tax rate of top earners going beyond the current 20 per cent.

Economist Yeoh Lam Keong, an adjunct senior research fellow at the Institute of Policy Studies, said more tax bands could be introduced at the top tier with higher tax rates, without threatening Singapore's competitive tax regime compared with that in most countries. One way is to introduce more tiers in the residential property tax regime, suggested Mr Chris Woo, a tax partner in PwC, a professional services firm.

Economists like Nanyang Technological University's Chew Soon Beng, however, doubt that the latest measures will significantly reduce income inequality.

Some point out that property tax revenue makes up about 7 per cent of total tax revenue, and the increase in property tax will just be a fraction of it.

Still, the measures are part of the Government's efforts to address the widening income gap and these include increasingly tapping the net investment returns contribution from past reserves to fund various schemes, noted MP Zaqy Mohamad.

Workfare and the permanent GST Voucher are two such efforts, he said. "But this Budget has expanded it to include a more progressive tax structure."

He added: "It's also a signal of how the Government is managing the widening income gap."

[email protected]

[email protected]