In India, the Union Budget was presented earlier this month, in which not only Finance Minister Arun Jaitley did not give any income tax relief but also announced different types of taxes such as Long Term Capital Gain (LTCG) tax and an increased in health and education cess. 19 days later, the Singaporean government presented the Budget in which it announced a bonus up to S$300 to all its adult citizens.
Reason: The government expects a record surplus for the current financial year. On the contrary, India had to increase it fiscal deficit target from 3.2% to 3.5%. According to media reports, Finance Minister Heng Swee Keat presented the Budget on Monday and announced ‘hongbao’ or the ‘SG Bonus’ where a part of the expected surplus from Budget of FY17 S$9.6 billion will be shared with all its citizens above 21 years of age.
All adults Singaporeans having an annual income up to S$28,000 will receive S$300 each, those between S$28,001 and S$100,000 will get S$200 and those with annual income more than S$100,000 will get S$100. Although, it is also interesting to note that Singapore is a tiny country with a population of 5.6 million, which is just 0.5% of India’s total population.
Moreover, Singapore has highly developed the free market economy with less corruption and highly pro-business, while India is trying to open its door to become a pro-business economy and corruption here is rampant. There is another interesting contradiction here, while the GST Council, in India, had been rationalising the tax rates, the Singapore government raised the GST from 7% to 9%.
While India is new to the GST regime and has multiple tax brackets for different goods and services, Singapore has an experience of over two decades in functioning under the GST. Notably, it was implemented in the year 1994 with a single rate of 3%, it was subsequently increased to 7% in 2007 but it was accompanied by offset package.