In Singapore, tax evasion is extremely low and it is almost impossible to escape from
tax. Tax is a measure primarily imposed to raise revenue so that the government can meet its
responsibility to provide for the general welfare and defense of its citizen as well as pay its
debt(A.Segal). There are many types of taxes that are imposed on Singaporeans and
foreigners who are staying in Singapore. Some examples are like income tax, consumer tax
(GST ), property tax and road tax that apply to vehicles owners.
Before we explore the reasons why tax evasion in Singapore is so rare in Singapore, we should question what is the role of taxes in Singapore. Why is there a need for taxes for Singapore or any country? Taxation is essential for all countries as it is the supply of funds for the government and the state itself. Without this funding, government will not have the capacity to build road, provide subsidies for education, healthcare and defence sectors. Hence, one of the primary objective of taxation of to provide the public good or subsidized goods and services that have social benefit that private enterprises that are unable to provide due to their non-excludability and non-rivalry nature for public goods or simply too unprofitable for private enterprises to produce.
Taxation is actually indeed the most significant foundation for government or state to develop. With a weak taxation regulations and law, there will be not enough resources to build the defence force in the country. Funding from taxation is the reason why Singapore Armed Force is able to purchase powerful weapons such as the recent acquisition of Leopard 2A4 Main Battle Tanks. Hence, the survival of one country especially a tiny republic of Singapore depends on taxation to fund the building up of a good defence. Singapore collects it taxes through a political institution in Singapore that is set up to administer the taxation issues, which is IRAS (Inland Revenue Authority of Singapore). Hence, all the different categories of taxes are implemented and regulated by it. There are four main sources of taxes in Singapore. They are income tax for individuals, corporate tax for companies, property tax and GST. There are also other less significant ones like stamp duty and casino tax. There are essentially few viewpoints to explain why people may choose to pay taxes and not evade them. Firstly, it is through coercion that people in Singapore has to pay tax. Tax evasion or fraud is a criminal offence, punishable under the law(Inland Revenue Authority of Singapore). There are several case studies in which tax evaders are being charged to court with penalty of jail and hefty fines issued to them. One case study will be an automative spare parts’ trader who was jailed for one month and two weeks and ordered to pay a penalty totalling one hundred eighty-three thousand and eighty-nine dollar on Friday for evading Goods and Services Tax (GST) and income tax(Chong). Therefore, it is legitimate for everyone to pay tax and it is under such coercion and fear of legal sanctions that many fear not to pay their tax. According to Michel Foucault, obedience and compliance to the law will unknowingly be habituated or disciplined to obey the state policies. He also argues that the public spectacles of physical punishment are used to inspire fear to other and act as a deterrence(Foucault). In congruence to the case study that I raised in the earlier discussion, the use of new media such as newspaper and Internet are utilized to warn the rest of the population and deter them from committing the similar acts. From another more optimistic perspective, the motivation for people to be willingly to pay tax is due to their faith in the state and the ability that the government is able to deliver the goods. This is proven over the years. Of all Southeast Asian postcolonial societies, Singapore is distinct in the way the People’s Action Party (PAP) government has...
Bibliography: A.Segal, Mark. The Essentials of Income Taxation. Research & Education Association, 2000.
Central Provident Fund Board. 2010 20-July. 2010 1-November .
Chong, Elena. 2010 27-August. Straits Times. 2010 25-October .
Foucault, Michel. Discipline & Punish. 2nd Edition. Knopf Doubleday Publishing Group, 1995.
HM Revenue & Customs. Income Tax rates and allowances. 2010 1-November .
Inland Revenue Authority of Singapore. 2010 31-March. 2010 25-October .
Peck, Jamie. Workfare States. New York: The Guilford Press, 2001.
Wee, C. J. Wan-ling. The Asian modern: culture, capitalist development, SIngapore. Hong Kong University Press, 2007.
World Bank Organisation. 2010 27-September. 2010 27-October .
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