By John Burton in Singapore
Friday, February 16, 2007
Singapore is to raise its goods and services tax from 5 per cent to 7 per cent to help finance state support for the poor. The move, announced yesterday, comes despite criticisms that it could hit low-income workers the hardest and affect the city-state's reputation as a regional shopping mecca.
The government also proposed increasing employer contributions to the state pension fund, while cutting corporate taxes by 2 percentage points to 18 per cent next year to persuade more foreign companies to invest.
Tharman Shanmugaratnam, second minister for finance, said the GST increase from July 1 was needed to finance new government spending for the poor as the income gap widens due to the effects of globalisation. Singapore ranks 105th in the world in terms of income equality, according United Nations data.
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