# Singapore Income Tax Increase Starting in 2016



## BBCWatcher (Dec 28, 2012)

Singapore is increasing some of its income tax rates beginning in 2016 (what the Inland Revenue Authority of Singapore calls "Year of Assessment 2017").

For the first S$160,000 of chargeable income -- for most people earned income less expenses, donations, and tax reliefs (such as Child Relief) -- there is no change in the income tax rates. For chargeable income above that amount, the marginal tax rates are increasing from a current range of 17 to 20 percent (3 brackets) up to a new range of 18 to 22 percent (with 4 brackets). The chargeable income threshold for the top marginal rate remains the same (S$320,000).

Singapore is also removing a tax incentive for certain royalties starting in 2016 (YA2017).

There is generally no income tax on passive income (interest, dividends, capital gains, etc.) received by individuals. Consequently the net effect of the rate increase is to impose a higher burden on labor/employment relative to financial income. Given the growing wealth inequality in Singapore the government will probably need to revisit this issue. Also, IRAS isn't adjusting the tax brackets themselves, and inflation means that low and moderate income workers are getting pushed into higher tax brackets.


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## simonsays (Feb 11, 2009)

BBCWatcher said:


> Singapore is increasing some of its income tax rates beginning in 2016 (what the Inland Revenue Authority of Singapore calls "Year of Assessment 2017").
> 
> For the first S$160,000 of chargeable income -- for most people earned income less expenses, donations, and tax reliefs (such as Child Relief) -- there is no change in the income tax rates. For chargeable income above that amount, the marginal tax rates are increasing from a current range of 17 to 20 percent (3 brackets) up to a new range of 18 to 22 percent (with 4 brackets). The chargeable income threshold for the top marginal rate remains the same (S$320,000)..


Lucky me .. my pay is nowhere near that bracket


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## BBCWatcher (Dec 28, 2012)

Yes, but inflation will inevitably push you up into higher tax brackets unless the brackets are revised upward.


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## simonsays (Feb 11, 2009)

BBCWatcher said:


> Yes, but inflation will inevitably push you up into higher tax brackets unless the brackets are revised upward.


Apparently in paper COL has been dropping .. says the govt number crunchers ..

But you are right ..


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## BBCWatcher (Dec 28, 2012)

January, 2015, versus December, 2014, Singapore's Consumer Price Index fell 0.2%. I think that's an annualized rate, though I'm not precisely sure about that. Year over year inflation (CPI) was at +1.0%.

That said, you never look only at one month or even one year when considering what happens over time when the tax brackets are not adjusted for inflation. Singapore has had modest, positive inflation, and that's expected to continue.

Singapore has _somewhat_ softened the blow of "bracket creep" by increasing tax reliefs, mostly for citizens. But without annual inflation adjustments, bracket creep will occur, resulting in real tax increases, particularly on lower and middle income workers.

My prediction, for what it's worth, is that Singapore will inevitably have to shift away from taxing labor and more toward taxing passive income. (Singapore also puts a heavy burden on labor in the form of employer and employee CPF contributions. It's not that CPF savings are bad -- they aren't -- but that all the mandatory savings burden falls on labor income.) The world (and Singapore) are absolutely awash in financial assets (and financialization), but take-home wages in Singapore are still too low. In my view income tax policy has to catch up with the world Singapore inhabits and its own experiences in that world.


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