Perhaps sometimes people are disillusioned by what they studied in JC economics text: that decrease in taxation will lead to an increase in biz investments, ceteris paribus. This statement is true when it stands alone definitely, but wait till you throw in other factors then corporate taxes will just be one of the many many factors an investor will consider before deciding if he wants to come to Singapore.

Cheers!

On what basis do you believe that there isn’t enough funds? Just by the word of one person? I think it’s a good thing to remain skeptical until evidence is given.

You have a point that citing deficiencies in luring foreign investments have no relation to increasing GST. However, PM Lee is planning to lower corporate taxes and increase GST. I don’t know what other way to read it, but it just seems like a redistribution of the burden of taxation so as to benefit corporations. The only logical explanation I have is that the government intends to lure more foreign investments this way.

Is raising GST the best solution? I don’t have a straight answer to this. I’ve already pointed out that lowering corporate taxes does not automatically mean more investments because there are alot of other factors involved. If the taxes in Iraq is zero now, do you think all the huge corporations are going to jump into Iraq now? I think not. I think that even if our corporate tax is not the lowest in the world, companies will still come if we can compensate them in other non-tangible ways. There’s no necessity to redistribute the burden of taxation.

The key issue now is, do these people in need require such assistance? And what are the main obstacles to render those aids? General areas will be both the generation of a fund that is sufficiently large as well as distributing them. These are two separate issues.

The Tax change is meant to tackle the first issue, not the second one. Citing the existing deficiencies related to the second issue does not demerit the choice to raise fund via taxation.

Now we need to explore how government could raise funds. Clearly, it could do so through raising taxes, increase fees for goverment services, or digging into the reserves.

Is helping the needy a good explanation to increase fees for government services? How about to increase ERP? or increase Corporate Taxes?

As such, raising GST is indeed the best solution.

Of course, the premise here is that we trust the government with the proper management of these monies.
If this is not the case, then no argument would suffice as it is no longer a discussion on the merit of the system.

I was trying to turn the government’s argument that low taxes attract foreign investments on its head by proving that rich people and big companies still stay in countries that have tax rates much higher than ours. If our government’s logic is true, we should be flooded with the world’s multi-millionaires and MNCs, since they can save tons of money in taxes every year by relocating here.

Well, I do agree lower income taxes and higher consumption taxes do encourage higher work rates among some groups of people. However, in Singapore’s case, poorer people don’t pay income tax. To levey a consumption tax across the board would incentivise them to work harder because they don’t have much income and in order to make up loss of purchasing power as a result of the consumption tax, they have to work longer hours and take on more jobs. Sure, a consumption tax does “motivate” the poorer people to work harder, but is it for the right reason, or rather, is the motivating factor ethical?

No, “the logic” would imply only that the people of all the other countries would be richer than they are now if they had lower taxes. It doesn’t say anything about how rich the other countries would be relative to Singapore.

Note that I do not agree entirely with the pro-tax logic, but it would be nice not to impute to your opponent more than what he says.

It is also notable that it is city-states like Sg and HK that are especially dependent on low taxes, because their lack of natural resources forces them to rely wholly on a healthy business environment and competitive human resources (i.e. people who are willing to work harder, and to some extent lower taxes encourage higher work rates).

1. The Corporate tax, however, is kept low to allow the working population to SAVE more.

Erm, corporate tax is levied on companies. If a company pays less tax, they have more profits. When they have more profits, it doesn’t mean they will pay more salary. How will the working populace be able to save more then? I don’t get you.

2. I think the issue here is that most Singaporeans are not convinced that the money will be used to help the poor. There were no evidence of how much shortfall there is to justify the increase. In fact, I see it as something that’s very similar to bus fare hikes. The bus companies are making millions in profits, and yet they claim they need to increase fares to cover rising costs. Unless the evidence is put out on the table, it’s hard to convince people.

3. As pointed out, America does have GST at the state level, though not on the federal level. And in anycase, if Singapore is too small and have no natural resources to exploit for gain, we just have to exploit our people, since its the only resource, right? And it seems to me that you support the exploitation of our people. That in itself is not wrong if the exploitation is done for a good reason. However, as explained in my previous point, I think we need to see the evidence to be convinced.

4. What’s your point? You gave reasons why you think foreign investments are not coming in. However, that aside, what’s your point? Going by your logic, no matter what we do, foreign investments won’t come in right? Then why bother lowering coporate taxes?