Greater equality with progressive tax system

I agree with Ernst & Young Solutions' Ms Wu Soo Mee that Singapore is moving in the right direction with a progressive tax system ("Hot under the collar about $80k tax relief cap"; Tuesday).

Under a flat taxation system, the percentage of tax paid by high-income earners and low-income earners is the same, even though the former earn vastly more money.

This results in the lower-income group losing a greater proportion of their disposable income and this risks having wealth concentrated in the hands of a small group.

Progressive taxation paves the way for more social equality by shifting more of the tax burden onto the wealthy.

Money collected from higher earners is redistributed to those lower on the income scale through social security benefits and government spending on public services, such as schools and hospitals.

This is the way forward, as wealth is transferred to the needy and the poor through increased spending on education and healthcare.

The rich have gained much from the existing structures in the country that helped them to create their wealth. Hence, it is right that they contribute more to ensure these structures are maintained.

Francis Cheng

A version of this article appeared in the print edition of The Straits Times on April 08, 2016, with the headline 'Greater equality with progressive tax system'. Print Edition | Subscribe