Why GST hike and taking up CareShield Life should not be delayed

It is Budget season again, and everyone has a wish list. Associate Editor Vikram Khanna sifts through the raft of proposals from businesses and industry watchers to take a close look at three tax priorities: the goods and services tax (GST), wealth taxes, and tax policies for large multinational enterprises (MNEs).

In his commentary, he explains why the GST hike should not be delayed: There is a $6 billion Assurance Package to cushion the impact, and an urgent need to rebuild public finances. Strengthening revenue resilience is also more than just about raising the GST - the tax base could be broadened beyond companies with $1 million or more in turnover.

On wealth taxes, he notes that the challenge is to design them so they can simultaneously address concerns over reducing inequalities, prevent property price spirals, and raise revenue.

Some suggestions include: collecting wealth taxes at the point of transaction rather than on declared wealth, which would be complicated to assess and lead to tax avoidance; and greater progressivity in existing property taxes and stamp duties, for example, by imposing higher taxes on high-value properties.

Today, several large MNEs operating in Singapore pay effective tax rates of well below 15 per cent because of various tax incentives. Once the global minimum tax takes effect, many of those incentives will be redundant.

What can be done to encourage them to stay? Grant investment credits, says Mr Khanna, and make direct cash subsidies for certain types of investments. "With MNEs under increasing pressure to finalise their tax planning strategies, and given their importance to the Singapore economy, the Government would need to clear the air on the tax policies they will face in the future. This too should be one of the priorities in Budget 2022."

Read the full commentary here.

In her commentary on the national disability insurance scheme CareShield Life, senior health correspondent Salma Khalik explains why it a good scheme for all but the very old.

She argues that even though those born before 1980 do not need to take it up now, they are better served by doing it sooner rather than later: "There is no difference in the amount paid, but coverage begins immediately. Buying in early would also ensure they don't get disqualified should anything untoward happen in these two years."

CareShield Life is compulsory for all Singaporeans and permanent residents born in or after 1980, from the time they turn 30 years of age. The monthly payouts can be used for everything from paying for nursing home care to hiring a live-in helper.

Where the cost-benefit analysis gets murkier is for older people, especially women. They have to pay higher premiums than men because of their longer life expectancy.

So is it worthwhile for you to pay more for peace of mind? Find out here.

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