This will lessen the impact to the lower-income group, according to Deloitte Singapore’s Budget 2018.
If ever the Goods and Services Tax (GST) will be increased to account for a greater share of government expenditures and ensure a sustainable revenue base, it must be done at a staggered and phased way to lessen the impact on Singapore’s lower income group, according to Deloitte Singapore’s Budget 2018.
“There are predictions on the ground that the GST rate is likely to be raised by one to two percent with perhaps a potential ceiling at 10 percent, which is the average GST/Value-added tax (VAT) rate in this region. Should the GST rate be increased by two percent, Deloitte Singapore would like to propose that the increase is staggered, one percent at a time,” according to a media release.
Deloitte noted that the GST is the second revenue contributor to government coffers however, changes have only been introduced to the personal income tax regime in the past years.
Should the rate hike be implemented this year, the increase should be accompanied by the introduction of zero-rating for certain basic necessities, said Low Hwee Chua of Deloitte Singapore and Southeast Asia.
Moreover, Chua adds that a simplification of the tax system stand to benefit SMEs the most as they face a disproportionately higher tax compliance cost compared to bigger companies.
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