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Singapore Budget 2018: Singapore still competitive despite higher taxes, Iswaran says

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The industry transformation maps (ITMs) rolled out by the government are not static plans but need to adjust to changing conditions, Minister for Trade and Industry (Industry) S Iswaran said on Wednesday.

[SINGAPORE] Singapore remains a competitive destination for businesses even though it's raising taxes and maintaining some restrictions on foreign workers, Minister for Trade and Industry S Iswaran said.

"When you take into account the whole scheme of taxes, including corporate tax regimes, personal tax regimes, I think Singapore still remains a competitive destination in relative terms," Iswaran said in an interview on Tuesday. "We never compete on the basis of tax or cost alone" but on value, he said.

Singapore's budget on Monday focused on future tax hikes to help boost revenue that has become more dependent in recent years on reserves to finance spending. With the threat of an aging population looming, the government is preparing to spend more on healthcare and pensions, while also allocating extra money for infrastructure and security.  The lesson from the budget was the "Singaporean approach" of balancing the financial burden over time, Iswaran said.

"You draw on the past reserves, some of the benefits from the past," he said. "You do what you can from your current generation, and then you also make sure that the future generation will have to do their part, but you don't pass - if you can help it - an undue burden."

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Among the tax announcements were an increase in the goods and services tax levy, property duties and a carbon tax. While businesses must still contend with a levy on foreign workers in some industries, those were left unchanged in the budget.

"We have been very clear that Singapore remains open - open as an economy, not just in terms of trade flow or investment flows or capital flows, but also in terms of talent flow," Iswaran said. "I want to disabuse anyone of the notion that somehow Singapore has closed its borders to flows of talent."

Businesses did see some wins in the budget, including an extension of the corporate income tax rebate and more support for research and development projects.

Iswaran said the move to hike the stamp duty on some residential properties wasn't about cooling the housing market, which has just recently started to recover from a four-year slump. The adjustment was to ensure "greater progressivity" and an equitable tax system in Singapore, he said.

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SINGAPORE BUDGET 2018

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