Raising GST is the best way to expand revenue base

THE recent media coverage on the possibility of tax increases tells us that the run-up to Budget 2018 is well and truly under way. The Chamber's view is that the government has very few policy options available to it to increase taxation on the current taxpayer base.

It is not surprising that GST has come under the spotlight. Increasing indirect taxation on consumption would be preferable to increasing direct taxation on personal and corporate income. Any increase to the rate of GST will have to come with rebates for the lower income group which would be most affected by any rate increase.

The alternative to a rate increase would be the lowering of the exemption threshold for GST which is higher in Singapore than in other jurisdictions. However, the downside to this would be that more smaller businesses would be liable to charge GST.

Corporate tax would appear to be off the agenda given that most jurisdictions around the world are lowering, or have lowered, their rates of corporate tax. Having said that, the government could consider reviewing all corporate tax incentives with the aim of achieving a higher overall effective rate of tax being paid by more companies.

Personal income tax would appear to be off the agenda too given that the top tier of personal income tax was raised a couple of years ago.

Fundamentally, Singapore needs a higher level of economic growth and more taxpayers to provide the government with the ability to maintain the Republic's competitiveness.

Victor Mills Chief Executive Singapore International Chamber of Commerce