Income should only be taxed once. As owners have to pay property tax, they should be exempted from paying income tax on the rental income. The rate of property tax can be adjusted for this loss of tax.
The worst type of taxation is GST. Apart from being inequitable and regressive, i.e. the lower income pay proportionately more tax, it imposes a heavy burden on the economy to account and collect the tax, and add to the cost of doing business. GST of 7% can be replaced by a flat rate of 4% deducted from the payroll and on investment income. The payroll tax of 4% should be paid by the employer and treated as the cost of doing business. This may be recovered from employees earning above a certain threshold.
Even a sales tax, used in USA, is better than a value added tax (like GST). The sales tax is simplier and less costly to administer. (The accounting firms love GST as it gives them business and profits.)
As we introduce new taxes and make changes, we must also take the opportunity to simplify and streamline our tax system. We need to take a bold step in this direction.
Some countries have introduced a flat rate tax system, for ease of administration. To relief the burden on the lower income, they provide generous deductions, so that the lower income do not need to pay tax. More details are provided here.
Tan Kin Lian
21 comments:
Life may be easier if things are simpler. But this is not the case in reality.
REX comments as follows,
For the personal income taxes, i have to say the govt had actually done some simplification. I was quite happy to recieve mail just last month, i was told that it is not necessary anymore to file income tax if i don't have any changes to my data! This is an unprecendented and good move, they will just do the collection at the back end and there is not even efiling for me, it saves time!
As for GST, it is obvious that is meant to cover non essential "luxury" items. This is the golden principle which is not being followed unfortunately. We are getting 5% hike in electricity (essential item!) soon, yet govt said it is to "pass on the cost" of higher oil prices. But what about the GST? There is also 7% tax on the increase! All GST should be waived, on electricity and water, they are essential items. To enforce conservation, they could instead charge when households spent certain percent above the average norm. That means rich people who wash 3 cars twice daily must pay much more, but ah beng with no cars don't pay much. There are so many ways to tweak the system, even if they don't want to abolish GST altogether, but pap just don't get it.
I would like to vote for any political party which has in its manifesto at least the following:
a. abolish GST or tweak the system substantially to ensure rich will pay more;
b. minimium wage;
c. review national service issues.
REX
Government can help our local companies by removing GST so that people have more money to spend. This will boost our local economy and generate jobs and our economy will not be so badly affected by recessions.
In Canada, GST is not levied on basic groceries.
In Sg, even children, students and non-income retirees are paying this tax to buy their food.
Comparatively, Hong Kong (no GST) have an overall lower personal taxation scheme, yet, Donald Tsang and his team can balance their budget to manage over 7 million people and still compete better against Sg in economics.
Sound too good to be true !??
Also remove entertainment tax - 10%. Useless tax that does not improve service standard or motivate the service provider to up their service.
GST my be the worst tax to us, but to the Government it is the best because it collects from everyone from pre-birth to even after death.
Nobody escapes paying GST.
Every time I buy things or services, I feel the pain of paying GST. Especially paying hospital bills. Imagine that a bill of $3000 (which is considered small in hospital bills) have to pay $210 of GST. Someone pointed out that even water conservation tax in our utility bill have to pay GST i.e. pay tax over a tax. (Of course Government explained it e.g. standard practice in taxation etc.)
Hong Kong no GST but yet they have lower tax rates and better social safety net. They can do it mainly because they treat land sale as revenue and also no national defence expenditure to worry about since they have a big brother (mainland China) to protect them. How nice if we have big brother to rely on. Mainland China also provide them the market for their goods and services. It also provides the financial power if Hong Kong ever needs their help when facing crisis.
CCL
Although I hated GST, which at 7% is very high, but in view of the large population of PRs and foreigners (most of them don't pay any income taxes at all), they are caught by the GST net. In this way, at least those foreigners and PRs have to pay some taxes. And that is the only reason I support the GST. GST should only be imposed on luxury goods and the amount imposed should be lower end of 2% to 3%.
To avoid GST or at least part of it is to buy things or services from shops or outlets that are not GST registered. e.g. buy foods from hawker centres instead of fast food chains. In that case, the value added part by the hawker will not attract GST. i.e. if the hawker sells a plate of noddles at $2.5, but his cost is only $1 i.e. value added $1.5. Then, patron will not be paying GST for the $1.5.
I'm not sure whether buying things online will avoid GST? If that is the case, more should make purchases online as a way to save money by not paying GST.
CCL
To concerned @ 3.41 pm
I find it really astounding that you accept GST just because it helps to make foreigners and PR pay more.
Let me tell you the flaw in your thinking. Not all foreigners are rich. Is the bangla worker rich, or the average china peidu mama rich? Some are average, normal people. They go watch a movie on weekend, they also have to pay GST. You say you are happy because you feel it has levelled up with singaporeans. Sure or not?
To summarise once again, GST cannot be justified if it is across the board on all types of services without regard to spending capabilities of the users especially. Also, GST should not be an excuse to feed the machinery which coughs out the monthly $250,000 salary of the ministers.
And, as a pertinent example, GST on electricity and water should only trigger or kick in AFTER a basic average benchmark quantity is consumed. There are many ways to tweak the system. Being creative and productive is the last thing the government wants to do in this area of governance.
They just one to play safe and make the citizen's pay for their salaries. THAT IS WHY GST CAN NEVER BE REDUCED, if the operating expenditure *salaries* is so high. GST is a huge source of income to support this wayword and self serving government.
Rex
You can "avoid" gst by buying from hawkers?
Think carefully & think again.
Hawkers already paid their "gst" when they buy the raw materials!!!!
The main purpose of a GST system is to ensure tax compliance because of its inherent checks and balances. Of course, this is of course when you are choosing GST instead of a sales tax or a service tax.
Another point to take note of is that GST is a tax on consumption and not on earnings. A sizable amount of expenditure in Singapore is actually from money earned overseas (hint: hotels and restaurants). Any net gain of taxable revenue originating from wealth generated outside the jurisdiction should certainly be viewed as a good thing domestically.
While GST may hit the poorer disproportionately more than the rich, one should instead be calling for more measures for redistribution or exemptions rather than a wholesale scrapping of the tax.
It seems that all solutions to fix the current problems e.g. cooling measures for the property market, reducing number of foreign workers lead to more revenue for the government, but rising cost for Singaporeans. Can we have a government that cares more for its people than its own pockets??????
Our government knows that because of their policies, a large number of Singaporeans are forced to work overseas, away from family and friends here. GST is an effective way to ensure that these people also pay tax, through the costs involved in everyday living of their family members who remain here in Singapore.
The totally daft GST are the ones that are applied to our utility bills, especially the tax on tax on the water conservation charge. Everybody needs water, and to tax on that is outrageously inhumane and speaks volumes of the care and concern, or the lack of it, of our government.
Time to consider people who are more caring and considerate of Singaporeans. Vote wisely in the coming elections.
"The point is the Singapore government is voted in by Singaporeans and should at all times consider Singaporeans' interests first: looks like now they finally get the concept right and that is why our PM now has gone public to put this on record. That he has to say it now is a shame because this is a basic requirement that should never have been questioned, just like the fundeamental requirement for a minister never to be dishonest, let alone corrupt, that makes the concept of having to raise their salaries by millions just so that they are less likely to be corrupt is a daft one."
The above is an excerpt from a comment on 'Mr Wang says so' on his article on Singaporeans and FTs irony.
REX comments as follows,
just to repeat a point, GST will never be reduced or scrapped, by the government as they need the poor AND the rich alike, to feed their humongous salaries.
The operating expenditure of the civil service esp the highly paid and overnumbered civil servants(SM, MM, PM, President) DEMAND that all of us must do our part to contribute. Therefore essential items like water and electricity will continue to be taxed at 7% maybe even 10% soon; it is obvious there will be no remission, else they cannot fund the Budget.
I heard that they want 8.5% increase in salary this year. But strangely enough, I am as yet unable to find this information in Straits Times (too embarrassed and afraid to expose their masters?).
To resolve the GST problem we have to attack the root. Never mind what great things were achieved in the past 50 years. They have changed, and so must we.
REX
Hi Rex,
I am asking for GST to be replaced by a flat rate tax on payroll and investment income. The government will collect the same amount of tax, but it will reduce the wastefulness in collecting and accounting small amounts of tax through the GST system.
No gst??? That is too good to be true.
Just can't imagine a spore without gst. U have taken the gst rebates, and now don't want gst?? It is very unlilely to happen.
People would be rejoiced if it is just reduced or lowered. But don't dream??
Taxing investment, incomes, etc will put the tax burden on the poor. Why? Money is mobile. It can cross borders in miliseconds just to avoid taxes. Rich people are also more mobile than poor people, and have clever accountants to help them avoid taxes.
Taxing property on a progressive rate is good idea cos the property (once built) cannot run away. So the guy staying in a mansion/ villa should rightly pay more than the guy in HDB. The guy staying in a villa has been benefiting more from our good security and national defence.
Singapore's property tax is low compared to a lot of western nations. Singapore's property tax is based on estimated annual rental income, while property taxes in places in USA is based on estimated market value.
REX comments as follows,
hi mr tan
if i understand you correctly your proposal of "payroll tax" which you also suggested should kick in above a predetermined threshold, is just same as the current tiered-income tax system? Is there any difference, conceptually?
I agree that tweaking the income tax, or introducing the payroll tax as you put it, is definitely a fairer way to more citizens according to their ability to pay, and at the same time, the kings will be able to continue to enjoy their monthly homongous harvest without having to change their expensive livestyle.
It seems like a win win situation, short of toppling the kings totally.
However, i guess that the kings are not likely to be bothered by such proposal, which as you suggested wouldnt harm them, --my guess is that they could sit on your proposal with no urgency at all whilst the lesser among us wait eagerly in vain.....
REX
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