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HO CHI MINH CITY, Vietnam : Minister Mentor Lee Kuan Yew says Singapore's corporate tax is to go down by at least one percentage point to attract more investors to Singapore.
He did not specify when this will take place but said that this will make Singapore more competitive in the long run.
Mr Lee was speaking to reporters in Ho Chi Minh City on the last day of his official trip to Vietnam.
MM Lee, who had visited the Vietnam-Singapore Industrial Park, said investors are not in Singapore simply because they like the country. It’s because Singapore offers them better returns than other places in the region.
And Singapore, he stressed has to remain attractive to investors.
One way is to bring down its corporate tax which now at 20%.
Said Mr Lee: "Hong Kong's income tax is 17%. In Ireland, its 14-15%. So we're going to bring it down (by) at least by 1 percentage point, and that's going to cost us four to five hundred million dollars. Then we're going to top the lower income to make sure they do not stagnate. And the GST has to go up for the next 5 years. We have to do this either now, or next year or the year after. So let's do it now."
And Mr Lee added that the proposed GST increase is in line with where Singapore's economy is heading next.
That is why it is necessary, even though Singaporeans will complain about the move.
"Popular government does not mean you have to be popular when you govern. All it means is at the end of your term, you've done all the unpopular things that were necessary to get you where you have to go and you get there. You're successful and everybody's better off. That's how we govern," said the Minister Mentor.
"If you govern by the polls, just keeping them happy for the next day, you'll be in trouble (because) we'll never make any progress."
The government has promised there will be an offset package to help the needy cope with the proposed two percentage point hike in the GST.
And Mr Lee said Singapore is not alone when it comes to a widening income gap caused by globalisation. But he expects things to equalise in the next 10 years, depending on how fast lesser developed countries can catch up and be on par in skills with Singaporeans.
By then, a new steady state will be struck between the higher and lower income groups. - CNA /ls
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