New tax policies should generate more robust economic activities

The Straits Times editor-at-large Han Fook Kwang mentioned in a recent report that the amount of taxes Singapore collects as a percentage of gross domestic product - 13.9 per cent in 2014 - falls far short of those in other developed countries - 34.2 per cent in Organisation for Economic Cooperation and Development countries (Time to introduce a wealth tax in Singapore; Jan 7).

This may be so, but let us not forget the indirect taxes the Government collects from sources such as certificates of entitlement and ERP.

About 10 per cent of our national budget comes from indirect taxes on cars and parking. Is this included in the calculation?

Policies on new taxes must go hand in hand with policies that can generate robust economic activities domestically.

As an example, in the property sector, the Government can abolish the additional buyer's stamp duty (ABSD) in favour of a capital gains tax, and keep or fine-tune the seller's stamp duty (SSD) and total debt servicing ratio (TDSR) to prevent "flipping" and to ensure loans can be serviced by a person's disposable income.

ABSD stymies activities and dampens economic sentiments - it grinds many activities almost to a halt. How much duties can be collected in such a situation?

Without ABSD, and moderated by SSD and TDSR, increased buying and selling activities can generate more in capital gains tax.

Lim Chuan Hock Robert