SINGAPORE - The Government announced a move to tax the rich more, while it gave taxpayers an immediate one-off 50 per cent tax rebate to help middle-income earners.
Marginal tax rates will go up for the top 5 per cent of income earners, who earn at least $160,000, with the increases being larger for the highest earners, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his Budget Statement on Monday.
For those in the top-tier, with a chargeable income above $320,000, the marginal tax rate for the additional income will go up by 2 percentage points to 22 per cent from 20 per cent currently. There will be smaller increases in the marginal tax rate for others in the 5 per cent group.
It will apply starting with income earned in 2016, and on taxes to be paid in 2017.
— MOFsg (@MOFsg) February 23, 2015
The top 10 per cent of taxpayers currently pay slightly over 80 per cent of personal income taxes, said Mr Tharman.
"This tax increase for high-income earners will enhance progressivity and strengthen future revenues," he said.
"This is a calibrated move. We have assessed that it should not significantly dent Singapore's competitiveness," he added.
For someone earning $250,000 a year, his effective tax rate (dividing the total tax by the total taxable income) will increase from 8.3 per cent to 8.5 per cent, with additional tax payable of $400.
A higher-income earner with income of $800,000 will see his effective tax rate increase from 16.0 per cent to 17.4 per cent, with additional tax payable of about $11,000.
A top income earner with income of $1.5 million will see his effective tax rate increase from 17.9 per cent to 19.5 per cent, or an increase in tax of about $25,000.
The change to the top income tax rates is expected to raise additional revenue of $400 million a year when it comes into effect, said Mr Tharman.
This change - which takes effect in 2017 - as well as including Temasek in the NIR framework, will provide additional revenues equal to about 1 per cent of GDP annually for the Budget over the next 5 years.
All taxpayers, meanwhile, will enjoy a one-off tax rebate of 50 per cent, capped at $1,000, for the year of assesment (YA) 2015 for income earned in 2014.
"I have set the cap at $1,000 so as to ensure that the benefits go mainly to the middle and upper-middle income groups," said Mr Tharman.
He added that some 1.5 million taxpayers will benefit from the rebate, which will cost state coffers about $717 million.