TAXES AND DUTIES
Individual Income Taxation
Corporate Income Taxation
Goods and Services Tax (GST)
Singapore's Double Taxation Agreements
Budget And Government Expenditure
SUPPLEMENTARY RETIREMENT SCHEME (SRS)
Claiming Tax Relief
INCOMES AND PURCHASING POWER
Incomes and Purchasing Power
Government Procurement Policies
Public Private Partnership
Our Nation's Reserves
Review of Corporate Governance & Regulation
THE NOT ORDINARILY RESIDENT (NOR) SCHEME
Employer's Contribution To Non-Mandatory Overseas Pension Fund or Social Security Scheme
Qualifying Conditions for NOR
All of these words
This exact phrase
Any of these words
Without these words
Ministry of Finance
Whole of Government
TAXES AND DUTIES
Goods and Services Tax (GST)
Why don’t we increase the NIRC instead?
Contributions from Reserves (NIRC) is now our single largest source of revenue. It is unwise to over-depend on one source.
Reserves are our national savings – for a rainy day.
Our generation is benefiting from NIRC because past generations saved and grew the reserves.
We too should leave a fair amount to future generations - we balance this by using 50% and reinvesting 50% of our investment returns.
Why don’t we borrow instead?
It is unsustainable to borrow to meet recurrent spending, like healthcare or other social spending.
If we keep borrowing every year, this means debt for our children and grandchildren.
Borrowing is more suitable for financing major long-term infrastructure projects because:
- The completed projects will benefit current and future generations.
Why don’t we use the revenue from land sales instead?
We already do. Past Reserves are used to fund land-related projects such as:
Land reclamation, including polders (which are part of climate change measures).
Creation of underground space like the Jurong Rock Cavern.
Land acquisition projects like HDB’s SERS (Selective En-bloc Redevelopment Scheme).
Past Reserves can be used for these purposes as the reserves are essentially converted back into land and the asset is preserved.
Can we use more of the revenue from land sales?
Our general principle is to preserve and grow our assets.
Selling land converts land (physical assets) into land sale proceeds (financial assets).
If we simply spend the proceeds, we are eating into our wealth.
Instead, we preserve and grow the assets by investing land sale proceeds as part of our reserves and earn income on it.
This income is part of NIRC.
We spend 50% of the income and keep the remaining 50% for future generations.
Hence, land sale proceeds are indirectly flowed back through NIRC.
In short, we make our land work for us by generating annual income.
Why don't we tax high-income earners or wealth more instead?
We already tax high-income earners and wealth.
For income, we increased the top marginal Personal Income Tax (PIT) rates for higher-income earners in Budget 2015, from 20% to 22%.
For now, PIT rates are reasonable to keep us attractive, given the intense global competition for talent.
We will continue to review our rates regularly.
For property, we:
Increased property tax rates for vacant or rented residential properties in Budget 2013.
Increased top marginal Buyer’s Stamp Duty (BSD) rate for higher-value residential properties in Budget 2018.
Why don’t we tax companies more instead?
Our economy is small and open. Companies can easily move their businesses out of Singapore if we become too expensive – Singaporeans may lose their jobs.
Corporate Income Tax (CIT) rates around the world are coming down.
US, UK, and France have cut or announced plans to cut taxes in recent years.
Closer to home, Malaysia and Vietnam have also cut their CIT rates.
Corporate Income Tax's comparison table
Singapore’s headline CIT rate at 17% remains competitive internationally. We will continue to monitor other countries closely.
Costs will go up. How will people manage?
Government will continue to absorb GST on publicly subsidised education and healthcare.
For healthcare, absorbing GST helps lower- to middle-income Singaporeans who are subsidised patients at public health institutions.
image for an example on subsidy to defray GST expenses on a polyclinic receipt
We will keep the cost of living affordable and manageable.
1. Enhance GST Voucher Scheme
Permanent GST Voucher scheme will be enhanced when the GST is increased. This will help lower-income Singaporeans and seniors.
Assistance is given in the form of:
- Cash for those with lower income.
- MediSave top-ups for most elderly aged 65 and above.
- U-Save for eligible HDB households to directly offset utilities expenses.
2. GST Offset Package
We will have a GST Offset package to help you adjust to the GST increase.
Lower- and middle-groups, and seniors will get more help.
DPM's speech on 10 Nov 2019
3. Government will continue to absorb GST on publicly funded education and healthcare.
4. Continued targeted support.
Apart from the GST Offset package, we will continue to provide targeted support for different segments of Singaporeans.
list of schemes
list of schemes (graph)
Why don’t we exempt or lower GST on basic household goods?
Higher-income households consume more. Such an exemption would benefit them more.
Instead, we charge the same GST rate on everything, and then use part of the GST revenue to target help for lower-and middle-income Singaporeans and seniors through GST Vouchers and other subsidies.
This is fairer and more effective, and makes sure the help goes to Singaporeans who really need it.
Experience of other countries shows that multiple rates complicate the GST system.
Difficult to define a “necessity” – leads to many disputes.
Raises compliance costs for businesses.
image of other countries' VAT classification on essentials
What about profiteering?
When we last raised GST in July 2007, most businesses did not raise prices beyond the GST increase.
Committee Against GST Profiteering (CAP) was formed to look into complaints of profiteering.
Similarly, when GST is raised to 9%, we expect business not to exploit this to raise prices.
We will convene the Committee this time too, to make sure this does not happen.
Why announce it so early?
As a responsible government:
We think and plan ahead to ensure Singaporeans’ needs are met.
We know healthcare and other social spending will increase with our ageing population.
Should not wait until the last minute and surprise Singaporeans. Need to inform Singaporeans ahead of time.
Better to be upfront and honest with our people now so they can prepare and make arrangements.
It is the right and proper thing to do.
Why do we still need to raise GST when HSR not going ahead?
GST and HSR project are separate issues. They do not affect each other.
Increase in GST is not meant to finance lumpy infrastructure investments.
Large, lumpy infrastructure investments will be funded as follows:
Saving ahead e.g. Changi Airport Development Fund and Rail Infrastructure Fund.
Borrowing by Statutory Boards and Government-owned companies.
We are also studying option of direct Government borrowing.
Unlike infrastructure projects, recurrent needs (e.g. healthcare, security, education) call for recurrent sources of revenue.
GST is one such revenue source that supports these needs.
Raising GST to meet these needs is a responsible and sustainable approach.
Do we really have to raise GST, and if so, when is it really needed?
Government has thoroughly studied our spending trends and different ways to raise revenues to fund our plans.
Based on this, the Government has concluded that it needs to raise GST sometime in the period from 2021 to 2025.
It is prudent to raise taxes in good time, and not only when our resources become strained.
When deciding on the exact timing of the GST increase, we will carefully assess the state of the economy, trends in expenditure and revenues.
Just as the decision to raise GST was not made lightly, the Government will also exercise care in deciding when to do this.
If you are unable to find an answer to your query, please submit your
to let us know how we can help you.
Last Reviewed on 15 Aug 2011
© 2020 Government of Singapore |
Rate This Website
Welcome to the Ask MOF page. Our questions are organised into the following categories. Please click on the respective categories to go to the section of interest to you.
Link to this FAQ