Singapore tops Asia-Pacific's 'Good Governance' Index?

According to this report it does. The emphasis under the taxation category appears to be about whether there is transparency and efficiency in tax collection, and whether tax rates encourage international businesses to invest. Given Singapore's reputation as an uber MNC friendly country, this is no surprise. We really do roll out the red carpet for businesses to invest in Singapore - I imagine this starts from EDB and IE's combined efforts in attracting investment, and then followed through by coupling that with various incentives especially those that are tax-related. Equally important is the enforcement of tax collection and how user-friendly the system is. On both counts it appears from the rankings that Singapore is doing a comparatively fantastic job.

However, Singapore's system has its detractors. According to this other blog post, we are a tax haven. Their issue is not that Singapore has low taxes, but that it does not cooperate in exchanging information with other countries and is thus a 'secrecy jurisdiction'. One view on this would be that we are merely modelling ourselves after Switzerland in terms of developing the private wealth industry, and our secrecy is a reflection of our understanding that people wish to keep the state of their finances private and confidential, and thus by allowing that to happen, we are able to attract more funds than other more transparent jurisdictions. On the other hand, there is the view that our status as a tax haven is damaging to our public image and international standing, and will deter investors in the long-term if countries start to turn away from us and implement measures to discourage their companies to invest in Singapore i.e. politically there might be a loss of goodwill.

This juxtaposition clearly serves as an interesting perspective on the many different directions that a country's tax policy can take, and how those policies are being compared against those of other countries. In the end, whether they work seems to me to always be a matter of whose point of view we want to take, and what criteria we want to base our judgment on.

New stamp duty taxes to cool Singapore's property market

Just read online that the government is imposing new stamp duty taxes. Check out the following articles:

http://www.businessweek.com/news/2011-12-07/singapore-imposes-new-stamp-duty-taxes-to-cool-property-market.html

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1170002/1/.html

In terms of the broader economic policy considerations, as always, there is a balancing approach that the government is trying to take here. If we free up the markets too much, we risk huge and sudden inflows and outflows of funds. This is destabilising because if all the investors of the world are trying to cash in on the booming property market in Singapore and invest all at once, property prices will sky-rocket i.e. inflation occurs. On the other hand, if we tax too heavily, businesses and individuals alike will be deterred from investing in Singapore property, which would lead to lower economic growth. Already I'm sure the various property investment companies aren't too pleased with this new tax.

Politically, I imagine that it would also not be popular for the government to allow a situation where foreigners own the vast majority of private residential property. That may well be the case in a totally free market especially with stories of the uber rich mainland Chinese buying up Sentosa Cove bungalows. This new tax is broadly in line with the efforts of the government to make housing affordable to Singaporeans, which was one of the main complaints made during the recent General Elections. However it is worth noting that this tax is only for private residential property and does not affect HDB flats which is the concern of Singaporean families with an average income. That said, the tax increase also affects PRs and Singaporeans, but to a lesser degree than foreigners. As an aside, I like that the government thought about what would happen if a citizen bought property with a foreigner and covered off that loophole.

In land-scarce Singapore, it seems that property prices have been on an upward trajectory and will as a general trend continue to just keep on rising unless the government takes increasingly drastic action such as higher taxes or massively increasing the supply of property. Singapore is becoming like Hong Kong in this regard. Whether the government introduces more or higher stamp duty taxes will depend on how successful these measures are at cooling the property market.

Hiya

So here we go. I'm hoping to use this blog as a process of discovery into the bewildering, complex but interesting world of tax. Tax may be one of the two certainties in life, but little else about tax seems certain. The laws change more frequently than most other laws (hello Budget Day), and they vary so much from country to country (HK versus Belgium for instance)! I like how tax is such a practical and important part of our lives - it affects just about every single thing you can think of and I also find it fascinating how it's actively being used by governments as a tool for social engineering. Our reactions to it also reveal plenty about who we are and what we stand for. Aside from policy issues, there are so many opportunities to be creative and imaginative with the practice of tax law itself. Law, being drafted by humans, is not infallible, and some digging around is likely to reveal unexpected inconsistencies and ambiguities - loopholes that easily get exploited, which then turns into an intellectual cat and mouse game with the authorities. In court, this manifests itself in all sorts of interesting situations e.g. whether Jaffa Cakes are cakes or biscuits, and whether Pringles are crisps or something else altogether! Tax seems connected to so many areas: economics, social policy, philosophy, accounting, politics...and so anyway hopefully I'll get to cover as many areas as I can in my quest to gain a deeper understanding of what this tax thingy is all about!