America is suffering a big budget deficit. It is not collecting enough taxes to pay for the cost of government and the social programs. The deficit is partly due to the weak economy, which reduces the tax revenue and the cost of the economic stimulus.to boost the economy.
An important contributing factor (which the Obama Administration is now targeting) is the tax avoidance by American companies which use a variety of ways to avoid tax, using "tax vehicles" and taking advantage of tax loopholes. They shift their profits to countries with low tax rate, including Singapore.
By reducing our income tax rates to attract these companies, Singapore has to introduce the Goods & Services Tax to make up this shortfall. It has its other negative consequences for the people and for the cost of doing business. GST is another layer of tax and is wasteful and costly to administer.
America and other developed countries are taking action on the tax avoidance. While Singapore will lose its value as a tax hub, I believe that it is better to have a fairer world, and countries do not try to compete on offering "tax incentives" to businesses to reduce or avoid paying tax.
I hope that Singapore can go back to the days of higher income tax and removal of the wasteful Goods & Services Tax (GST)
Tan Kin Lian
Mr Tan,
ReplyDeleteThe "tax incentives" to businesses are to attract jobs and investments to SIngapore. It also has a multiplier effect in bringing expatriates who needs housing, schooling, transportation, etc.
I know bec I had tried to obtain those incentives but failed bec my co does not create enough jobs. Another co that I know manage to get it bec they have been bringing in their sales and expanding their workforce tremendously.
Be aware of what you are asking for Singapore! No offence intended.
Without this, Singapore may have a higher unemployment rate than you can imagine. Congratulations to EDB and IE Singapore for a job well done!