The PAP government is determine to make sure Singapore remains one of the best places in the world for multinational companies to do business in, said Finance Minister Lawrence Wong.
In a TV interview with CNBC’s Martin Soong on Feb 21, he added that there are other factors to consider setting up shop in Singapore even if the world moves toward a minimum 15 per cent corporate tax rate. According to CNBC, Organization for Economic Cooperation and Development countries agreed to a global tax minimum tax rate of 15 per cent in October last year and will kick in in 2023.
“We have never only relied on taxes for investments. What it means for us is that we have to redouble our efforts to strengthen our non-tax competitive factors that include our infrastructure, the capabilities of our workforce, and continuing to strengthen and make our overall business environment more attractive and conducive,” said Minister Wong.
On imposing wealth taxes
He also mentioned that the government is looking at a broad range of wealth taxes but remains cautious that money will flow away.
“The challenge with these sorts of wealth taxes is that wealth and financial flows are highly mobile. And if we were to move but other jurisdictions do not have similar taxes, it is very easy for wealth to move away from Singapore to another location,” he explained.
On that front, the recent Budget announced that the rich will pay more property tax and Additional Registration Fee for luxurious vehicles.
Delay in Goods and Services Tax (GST)
Mr Soong also quizzed Minister Wong on the staggered GST hike, asking why not delay it even further.
Minister Wong explained that Singapore’s revenue needs are very pressing and the government drew S$53.7 billion from the reserves over the last two years to help Singaporeans during the pandemic. A Straits Times report noted that from the last GST hike in 2007 to 2019, government spending rose from around S$33 billion to S$75 billion a year, with social spending nearly tripled and healthcare expenditure grew from around S$2.2 billion to S$11.3 billion.
“Our revenue needs are indeed very pressing. As you highlighted, we spent a lot of money in the last two years throughout the pandemic. So the revenue needs are indeed very pressing. In fact, on that alone, we would have to raise GST in one shot from 7 to 9 per cent and sooner, this year. But it was precisely because of the concerns that many people have about having the GST rates go up at a time of rising prices that I decided, having looked at the overall situation, looking at the inflation outlook, and the state of the economy, that we can find a balance by delaying the GST and staggering it over two years,” he added.
Singapore – a politically stable country
The ability to attract MNCs is also down to Singapore’s political stability, built on a foundation of constructive and non-fractious politics.
The hallmark of a PAP-run government is not one of groupthink but rather its strength of reflecting internally.
Take the Government Parliamentary Committees (GPCs) for example.
Mooted by ESM Goh Chok Tong in 1987, the GPCs are set up by the Party to scrutinise the legislation and programmes of the various Ministries and are chaired by backbenchers. These committees, which mirrors all the ministries, also serve as an additional channel of feedback on government policies.
In addition, there is a range of diverse views coming from the Nominated Members of Parliament, Non-constituency Members of Parliament and the office of the Leader of Opposition – all created by our Party.