Tan Kin Lian's Blog: Attracting business into Singapore with lower taxes

Monday, September 28, 2009

Attracting business into Singapore with lower taxes

Some people argued that low taxes are needed to attract people into Singapore to create wealth and provide employment for the people.

Do not be fooled by this argument. Let us look at the facts.

The two sectors that created the most wealth and employment in Singapore were the banking and property sectors. These sectors generated huge profits and employed large numbers of people in marketing, sales and the back offices.

They created false wealth by generating a huge bubble in asset prices. Many people thought that they were wealthier when the bubble grew and the prices of their assets inflated. Unfortunately, high property price is really a burden that has to be paid over a lifetime and is a major contributor to the high cost of living in Singapore. The burden is higher for the future generations.

The bubble has now burst and caused the global economic crisis. Singapore has its share of the pain.

There is no point in attracting business into Singapore, through lower taxes, if the outcome is to create false wealth and to leave a heavy burden on future generations.

Tan Kin Lian

13 comments:

Anonymous said...: Even casinos also OK, what else cannot?

Ultimately the masses suffer.

What to do.; September 28, 2009 8:36 AM
Anonymous said...: They are attracting the wrong people, the rich and the famous and some not famous and other infamous to use our laundry machines here.. The casino will be another place where their money will be washed clean.; September 28, 2009 10:14 AM
C H Yak said...: It is one generation trying to make "fast" money from another generation.

Just like scenario Mr Tan had shared in the article "PREPARING FOR THE WORST
" by Robert Kiyosaki.

Quote :-

< Demographics show that we are entering a battle between young and old. I call it the "Age War." >; September 28, 2009 10:23 AM
Anonymous said...: In 1997, the cause of Thailand financial crisis was property bubble. Drive a car from south to north of Thailand and see it yourself.

Thailand practiced capitalism 10 years earlier than Singapore and half-failed.

The price - military coup in Sec 2006; September 28, 2009 11:12 AM
Anonymous said...: "Even casinos also OK,...."

Will super-rich play casino?
Will the rich play casino?
Who else can afford to play, stay & eat there?

Taiwan is planning a Casino to attract PRC rich.
Many neighbourhood countries are following the same strategy legally or illegally.

Supply of canino will more than demand. What will happend to SG casino after 5 years?
How do SG Casino pay their bank loan ($billion)?

Where the Asian poor play their casino?
Illegal casino in Myanmar, Cambodia,
China-Russia boarder, farms & hotel

Both SG Casinos may open its door at discount entrance fee to attrat the local.; September 28, 2009 11:46 AM
Anonymous said...: Dear Mr Tan

You are absolutely right...the PAP is very good at making the surface of our society look good ...so easy task given that the media is totally under its control...PAP had made many mistakes in recent years, especially its public housing policy that had inflated property prices to unrealistic values and frightened off many S'poreans of starting a family here...made worse by the high influx of foreigners fighting with S'poreans for jobs with lower pay expectations...high cost of living coupled with depressed wages only equals Russian's standard of living...Really very depressing...; September 28, 2009 2:58 PM
Anonymous said...: MR TAN
You have made an interesting point worthy of rethinking relating to "low tax policy to attract business to Singapore". Another way of putting it - We cannot ignore the Real Sector and just look into the the Finance Sector. Thanks.
From CASHEW NUT.; September 28, 2009 6:26 PM
Anonymous said...: Less than 5% of the total gross floor space will be used for casino.
The remainder 95% will be used for hotel,convention, shops,exhibition and stage shows

Revenue expected to come from MICE activities.
Casino is secondary. Same with Sentosa Leisure group. Its more for family entertainment.

Why will they come here?
1) safe + secure ( other places, crime rate is high )
2) easy to come + go with airport just 30min away
3)Reliable support for shows, exhibition
4)Clear enforceable rules.

We have nothing else to attract people here.
No mountain
No valleys
No snow
No earthquake
No tsunami
No flood
No opposition

We have oldest surviving political party
We have HDB (unique)
We have ERP ( first in the world )
We have coupon parking ( greatest invention )
We have Haze
We have limitless chicken rice + bak chor mee
We have cosmopolitan population ( no original left)
We have 1 hill
We have heat & humidity
We have most expensive cars in the world ( and yet)
We have largest oil refinery in south east asia

We have nothing.... all man made.; September 28, 2009 6:52 PM
Anonymous said...: How much lower taxes do banks and property companies pay, compared to the rest?; September 28, 2009 7:56 PM
Anonymous said...: Good observations.; September 28, 2009 8:05 PM
Vincent Sear said...: I think that a fixed corporate tax at 20% is simple and fair enough to attract and retain business investments, whether local for foreign, as long as we have the business-friendly infrastructure in place.

I don't think that every once in a few years adjusting a few percents up or down can do any difference except create uncertainties for companies and generate business for accountants, i.e. add costs for companies.; September 29, 2009 3:41 PM
Anonymous said...: That i don't quite agree. How do we define false or true wealth. Just as in trading, people like to use the word bull trap or bear trap, but the smarter people would have taken the profit. Not that i am the smarter people, but i do hope to be one :)

I think the question is more towards the distribution of the wealth. I don't think everyone has equal and fair opportunities to get this 'wealth'.; September 30, 2009 7:50 PM
Don Lim said...: Corporate taxes should be increased, while personal income taxes reduced.

In this knowledge economy, whichever city has the most talented people, companies will follow them.

Our corporate tax is still very low compared with developed countries with much lower productivity. In fact, Singapore has been ALWAYS among the top 3 most productive nations in the world. It's much more easier to start and do business here than in ANY country. So, even if our corporate tax is equal to that of other high tax countries, we would still be attractive to foreign investors. WHy should we give them a discount so that move all the profits back to their home countries?

Our strategy should be to lower personal income tax in order to attract the most talented people to come here. Increase the corporate taxes. The corporations will still come. And, since USA and most European countries will have to raise taxes, even by increasing corporate taxes we will still be relatively more attractive as a place for businesses. They will have to migrate to a lower-tax country like Singapore.; October 13, 2009 2:47 AM