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Taxes are used to develop Singapore into a stronger community, a better environment, and a more vibrant economy, a place that Singaporeans can be proud to call home.
Taxes go towards the funding of government expenditure. In FY2021/22, the largest sector making up 55.1% of total Government Operating Expenditure is the Social Development Sector. The Security & External Relations Sector (which includes expenditure in areas such as Defence; Home Affairs; and Foreign Affairs) takes up the second-largest share (27.8%) of total operating expenditure. The Economic Development Sector and Government Administration sectors make up 13.6% and 3.5% of government operating expenditure respectively.
Source: Economic Survey of Singapore, Second Quarter 2022
Fiscal policy is the use of government expenditure and revenue collection to influence the economy. The two main instruments of fiscal policy are government expenditure and taxation. In Singapore, the long-term objectives of fiscal policy are to:
Underlying the above objectives are the recognition of market forces in driving the economy, financial prudence, and emphasis on human and infrastructure investment.
Tax policy is an integral part of fiscal policy. The main objectives of tax policy in Singapore are:
The fundamental tenet of Singapore’s tax policy is to keep tax rates competitive both for corporations as well as individuals. Keeping our corporate rate competitive will help us to continue to attract a good share of foreign investment. Keeping our individual rates low will encourage our people to work hard. It will also make risk-taking worthwhile and encourage entrepreneurship.
To increase the resilience of taxes as a source of government revenue, Goods & Services Tax (GST) was introduced in 1994. This balanced mix of tax on consumption and income reduces the vulnerability of revenue intake to adverse changes in economic conditions and strengthens the resilience of Singapore’s fiscal position.
There are three main sources of government operating revenue, namely tax revenue, fees and charges, and other receipts. Tax revenue accounts for 73.6% of the government operating revenue for the financial year 2021/22. The most significant is tax revenue from the various taxes imposed by the government, which are as follows.
IRAS is responsible for collecting income tax, goods & services tax, property tax, stamp duty, betting taxes, and estate duty (for deaths occurring before 15 Feb 2008).
© 2022, Government of Singapore
Last updated on 23 August 2022