Tax Reliefs Not Meant To Offset Cost Of Living16 Jun 2007
I refer to Mr Ng Kei Yong's letter "Why isn't tax relief adjusted for inflation" (12 June), which suggested that our tax reliefs be pegged to inflation to reflect the cost of living.
2. The Singapore tax system provides for a wide range of tax reliefs, including the Wife and Child Relief mentioned in Mr Ng's letter. These reliefs recognise the taxpayer's support for his or her family, but are not meant to approximate the actual cost of doing so. Hence, they are not pegged to inflation or the cost of living. Nonetheless, the Government does review the relief regime from time to time.
3. Mr Ng remarked that compared to Hong Kong, the amount of tax relief given is paltry. However, we should not look at each relief in isolation but consider the overall income tax burden. In this regard, while Hong Kong may offer higher reliefs in certain categories, the vast majority of taxpayers enjoy a lower effective tax burden in Singapore, due to our generally lower and more progressive tax rates.
CHEONG SWEE YING (MS)
CHIEF TAX POLICY OFFICER
MINISTRY OF FINANCE