SINGAPORE, Jan 22 (Reuters) - Singaporeans have to address the “existential” question of how to use taxes to support those less well off in society, the head of the city-state’s central bank said on Monday, pointing out its ageing population.
“The ability of societies to sustain dynamism... and deal with dislocations is going to depend on governments’ fiscal response. On top of that we have the effects of demographics and the population ageing,” Ravi Menon said at an Institute of Policy Studies event.
“The willingness of a society...to pay in taxes to support those less well off is quite critical. You see this in the small European countries and they do this quite well. And I think this is one of the existential questions we have to face.”
Singapore has some of the lowest tax rates in the world but government officials have signalled the need for higher taxes to support future social spending and infrastructure needs. Changes may be unveiled as soon as the Feb. 19 budget, analysts say.
A survey published last week showed Singaporeans were not in favour of higher taxes to support their elderly and would prefer the country to tap its national reserves to deal with future social spending increases. (Reporting by John Geddie and Masayuki Kitano; Editing by Sam Holmes)