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No tax hike expected for Budget 2015: Experts

SINGAPORE — Following up on last year’s Pioneer Generation Package, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam is expected to unveil more measures to help address the needs of an ageing population when he reads the Budget statement in Parliament on Monday (Feb 23).

Singapore Central Business District (CBD), night skyline. Photo: Ernest Chua

Singapore Central Business District (CBD), night skyline. Photo: Ernest Chua

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SINGAPORE — Following up on last year’s Pioneer Generation Package, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam is expected to unveil more measures to help address the needs of an ageing population when he reads the Budget statement in Parliament on Monday (Feb 23).

Head of Tax at KPMG Tay Hong Beng said: “In the longer-term perspective, I believe the expenditure will go up because of social spending. One of the major items that we could possibly be looking at could be the Silver Support Scheme, which was mentioned in last year’s National Day Rally.

“However, no details have been released aside from the fact that this initiative is going to provide elderly Singaporeans from the low-income group, to help them get by with living expenses.”

And while, social spending could be in the billions of dollars - tax experts said they do not expect any increase in tax rates, at least not for the upcoming Budget.

National University of Singapore Associate Professor (Practice), Simon Poh said: “The Government needs to find additional source of Government revenue in order to fund the various social programmes that are coming on-stream.

“So, if you look at the major components of taxes, three taxes form the bulk of it. We have corporate income tax, Goods and Services Tax (GST) as well as individual income tax, which traditionally form about two thirds of the tax revenue. We are not going to see the increase this year, but at some point in the future,” he said.

“So the question is the timing - whether its going to be two years later, or five years later, or the other next question is also whether the increase is going to be a modest increase of 1 per cent to 2 per cent or even looking at a higher rate such as 10 per cent.”

Aside from simply raising taxes, analysts said there are other ways for the Government to increase tax revenues. These include ongoing efforts to bring more companies into Singapore, which would improve the taxable base.

“The focus should really be to try and increase the base,” PwC Singapore tax leader, Chris Woo said. “To try and bring in more revenue to Singapore, you do this through several means. It stands that we will increase our corporate revenue base and therefore our corporate tax base. There is a knock-on effect.

“With the C-suite being here - the generally high-income earners, we will have more people to tax, and they spend more, so there is more GST to collect.”

Figures from the Inland Revenue Authority of Singapore (IRAS) show that tax collections from major components - corporate, personal income and GST - have been rising in the last five years. In FY2013/2014, collections from corporate taxes amounted to S$12.7 billion dollars, while income tax contributed S$7.7 billion and GST, S$9.5 billion. CHANNEL NEWSASIA

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