Singapore’s taxation system

• Main Authors: Chang, Min Min, Chua, Valerie Hui Er, Koh, Jieqi
• Other Authors: Tan Kim Heng
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Social sciences::Economic theory::Public finance
• Online Access: http://hdl.handle.net/10356/59374
• Institution: Nanyang Technological University

This paper aims to examine the adequacy of Singapore‟s taxation system in achieving the four criteria of a good taxation system namely efficiency, equity, competitiveness and simplicity. To identify the strengths and weaknesses of Singapore‟s taxation system, we have chosen Hong Kong, Sweden and Switzerland for international comparison. Our finding is that Singapore has done well in the efficiency, simplicity and competitiveness criteria to spur economic growth. However, with a high Gini coefficient even after adjusting for tax and transfers, income inequality is prevalent in Singapore. This strongly highlights that Singapore‟s tax system has been too focused on economic growth and yet, this growth has not been all-inclusive and is inadequate in reducing inequality in Singapore. In addition, healthcare spending is projected to multiply in view of an ageing population. By 2020, Singapore‟s expenditure over the GDP will increase to 15.2% while the average tax revenue over the GDP from 2001 to 2012 was about 14.8%.Together with the need to ensure equitability of Singapore‟s tax system by increasing her expenditure on special transfers, it is likely that Singapore will need to increase her tax revenue in future. Therefore, Singapore‟s tax system needs to be reformed to one that promotes growth with equity while raising more tax revenue.