Income tax rebate to help those who lost jobs?

Business people walk through Raffles Place, Singapore's central business district.
Business people walk through Raffles Place, Singapore's central business district.PHOTO: BLOOMBERG

The Budget should include a one- off tax relief to help households and workers weather the slowing economy, say some experts.

"(The relief) could take the form of the 50 per cent income tax rebate that we saw in 2015, for example, but with a more targeted application, such as on recently retrenched workers," UOB economist Francis Tan told The Straits Times.

The 2015 Budget included a 50 per cent personal income tax rebate for all taxpayers, partly because of the SG50 celebration.

There are more than a dozen claimable tax reliefs in the system - such as working mother's child relief or parent relief - but rebates are less common.

Said Mr Tan: "Now may be the time to consider these measures again. With slow economic growth and the labour market softening, any tax savings may help boost consumption and investments."

The growth in private consumption slowed to 0.6 per cent in the third quarter last year, compared with the same period in 2015, the weakest since the global financial crisis in 2009. If expansion in 2016 comes in at 1.8 per cent - the official estimate - it would also be the lowest since 2009.

PwC global mobility services director Girish Naik supports moves to temporarily ease tax burdens for those suffering from a "cash crunch". He said: "A broad-based rebate might be difficult to implement but it can be made applicable to specific individuals, such as retrenched employees. The relief can also come with a cap, at say $1,000, so that the measure will be of greater benefit to lower-income earners."

A tax relief cap ensures that people who earn more still pay a proportionate amount of tax. The 2015 tax rebate also carried a $1,000 cap, while an $80,000 cap was announced last year on the total amount of personal income tax relief claim.

"Another thing, perhaps, worth considering is removing the lowest two personal income tax brackets, which means income tax exemption for chargeable income of below $40,000," Mr Naik added.

Mr Tan estimates that the Government likely reaped higher revenue contributions from corporate and personal income taxes last year, at around $23.7 billion.

This could help deliver an overall Budget surplus of $6.7 billion for 2016, compared with the official forecast of $3.4 billion, he said.

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A version of this article appeared in the print edition of The Straits Times on February 09, 2017, with the headline 'Income tax rebate to help those who lost jobs?'. Print Edition | Subscribe