PAP to cut corporate tax rate (for the rich)

Singapore is prepared to cut its corporate tax rate to remain competitive in the global race for investments, Prime Minister Lee Hsien Loong was quoted by local media as saying.

Mr Lee said Singapore might have to adjust its current 20 per cent corporate tax rate if Hong Kong moved to lower its own 17.5 per cent rate, the Straits Times reported.

Mr Lee made the comments in parliament on Monday, where he also revealed plans to raise the Goods and Services Tax (GST) to 7 per cent from the current 5 per cent.

The Hong Kong government has proposed a GST to broaden its tax base, and says reductions in income or profits tax, or even both, would accompany any introduction of such a tax. But it is facing mounting public opposition to its plan.

"Hong Kong is competition for us," he said. "If they do a GST, they may decide to bring their corporate tax down. We may have to follow them down." - NZ

PM Lee: GST to be raised to 7%

"It will give us precious extra resources to implement social programmes like Workfare later on. Our aim is to help the lower income groups and the elderly, not to increase their burdens. When we implement the GST increase, it's not just the GST increase, it's the package which will fully offset the impact of the GST increase and begin to strengthen the social safety nets and tilt the balance in favour of the low income groups - we will not just raise the GST but we will have a comprehensive offset package"

This package will be weighted more to the middle and the low income groups, especially the elderly, and it will more than offset the GST increase.

"It is not just an offset package to deal with the GST. It is a whole set of measures which we are taking in order to tilt the playing field in favour of the lower income group, which is what we have to add and tally in the balance, and my purpose is to help the lower income group. For the middle income, it will be generally about ok; for the higher income, I think the higher income should end up paying more overall. It's part of being one society. I'm not going to tax 15% on income tax, I'm not going to tax 25% from GST the way the Scandanavians do, but I have to make the adjustments of 2% which I think is fair and I think Singaporeans will support,"