SINGAPORE - There is scope for progressive taxes on high-income earners and corporations to be raised to increase revenue, said Dr Intan Azura Mokhtar (Ang Mo Kio GRC) in Parliament on Wednesday (Feb 28).
"Taxes seem to weigh heavily on the minds of many Singaporeans, in the lead-up to the Budget announcement," she said in her Budget debate speech, adding that many were worried about possible increases in taxes.
Voicing her support for the Budget, which she said looked at how taxes can supplement government revenues so as to fund increased social spending, Dr Intan nonetheless said there is room for increasing personal income tax on high earners.
She noted that Singapore's personal income tax rate still falls behind that of similar economies like Taiwan and Hong Kong.
In Singapore, after the latest increment in personal income tax rates which came into effect for the 2017 year of assessment, those who earn more than $320,000 in assessable income are now taxed 22 per cent. In Taiwan, however, those who earn more than $200,000 in assessable income have to pay a maximum personal income tax rate of 40 per cent; in Hong Kong, the maximum personal income tax rate is 17 per cent, and this is applicable to those whose assessable income is more than $30,000.
"Hence, I feel there is room to increase the personal income tax rates for higher income earners," said Dr Intan.
She suggested that those earning more than $320,000 and up to $500,000 in assessable income can be charged a personal income tax of 22 per cent, for example, while those earning between more than $500,000 and $1 million can be charged a rate of 24 per cent.
At the same time, the prevailing corporate tax rate of 17 per cent can be reviewed, said Dr Intan. Instead of raising it across the board, multi-national corporations and large companies - especially those among the top 1,000 earning firms in Singapore with annual revenues of more than $1 billion - can be charged a slightly higher tax rate of 17.5 to 18 per cent.
"It is a small increase, in order to keep Singapore globally competitive for businesses, but the revenue that can be generated to fund government expenditure and social spending is significant even with this half to one percentage point increase," she said.
Dr Lim Wee Kiak (Sembawang GRC) also voiced concerns from residents about the impending GST (Goods and Services Tax) hike, due some time between 2021 and 2025, and asked it can be delayed. If enough revenue is raised in the interim, the GST hike can even be scrapped.
He said: "The appeal from residents was to delay the GST increase as far as possible...(or) better still, have plans to grow the economy, so that the income and revenues of Singaporeans and businesses can grow, growing the revenues of the country concurrently, so that if we can, it can deter the GST hike indefinitely."
Nominated MP Azmoon Ahmad also mooted the introduction of a progressive tax system for donors to encourage donations, so that Singaporeans do not become over-dependent on the Government for grants and subsidies. He said that he will be elaborating on this plan during the debate on ministries' spending plans next week.