Singapore to fund social programs by taxing rich
Print Edition
Singapore yesterday announced income tax rises for the top 5 percent of the population to fund rising social spending targeted at the poor and elderly in the rapidly aging city-state.
The marginal personal income tax rate for those earning above S$320,000 (US$235,000) a year will rise to 22 percent next year from 20 percent, Finance Minister Tharman Shanmugaratnam told parliament as he unveiled the 2015 budget.
The increase is expected to add S$400 million to the government鈥檚 current revenue of S$61.35 billion.
鈥淲hile everyone contributes something for a better Singapore, those who are better off should contribute more,鈥 Tharman said.
In 2007, the government introduced a form of negative income tax for low-wage earners, and in his speech yesterday Tharman announced a new aid package for poor elderly citizens worth S$350 million annually.
鈥淚t鈥檚 fair this enhanced support for those with low incomes should come chiefly from revenue contributed by the high-income group,鈥 Tharman said.
Observers said the move aims to tackle discontent at a widening income gap. The top 10 percent of households had an average monthly income of S$31,142 last year compared with S$1,775 for the bottom 10 percent.
鈥淭his is a concrete step ... to address the issues of income inequality,鈥 said political analyst Derek da Cunha.
Eugene Tan, an associate law professor at Singapore Management University, said the tax rise was a 鈥渢argeted response鈥 to growing calls for increased redistribution of wealth.
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