INCIDENCE OF TAXATION IN SINGAPORE

Abstract

In the final analysis, who pays the tax? In any study of the incidence of taxation, the economist is faced with the unenviable task of answering this question. Despite the increased sophistication of incidence estimations today, there still exists considerable debate over the incidence of major taxes. Irwin Gillespie said the following of the burden of corporate taxation in Canada : "If we as technicians are truly honest, we would admit to the layman that we do not know the incidence of the tax." He further added, "...the same goes for the property tax and sales tax." Viewing the tax system as a whole, he said. " it is not a straightforward matter to inform the layman as to who bears the incidence of Canadian taxes." Likewise, the present tax system in Singapore has evolved over the years into a complex system which makes tracing tax shifting an extremely difficult task. Given the present state of the art of incidence estimation, the incidence estimates in this study are presented with caution and with assumptions explicitly stated. Chapter III is an empirical study of the incidence of taxation in Singapore for the year 1982-83. To illustrate the sensitivity of results to various assumptions, a sensitivity analysis is carried out in Chapter IV by varying allocation assumptions of the major taxes. Acknowledging the limitations inherent in empirical studies on tax incidence, a descriptive approach is adopted to extend the analysis to the present text system in the last chapter.