Low Income Taxes

Income Tax in Singapore is very low. It tops at a maximum of 22% for extremely high-income
earners, which are very few. This increases productivity by encouraging saving, investments and
innovation in people. This in turn increases economic growth and prosperity in the nation.

Acts as “Middleman” for many activities in its region

Singapore is “not a producer but a facilitator of economic development”. There are instances
supporting it:

 It lacked land and other resources to be an oil country, so it decided to refine oil and
ship it to the other neighboring countries. Singapore refined oil and took advantage of
being in the middle of the major shipping routes. This also attracted massive
investments.
 It didn’t have much opportunities for tourism but developed itself to be a destination
for people to come and stay over that visit countries like China and Japan.
 It operates one of the largest airline companies in the world.

Expensive Car Registration

In Singapore, car registrations are expensive. People need to spend a lot of amount for getting a
car on to the road in Singapore. A basic model of Honda City would cost approximately 1,04,000
US $, when it normally costs in the range of 15000-2000 US $. This is a government’s way of
saying that you need to be a productive member of the society in order to buy a car. This
income generated from the car registration is put back towards developing public transport
infrastructure. This shifts the balance between the supply and demand of automobiles to a
more favorable level as people would prefer catching a train usually than buying a car.

Learnings for other countries from Singapore’s experience

The policy makers in the other countries can also learn from Singapore’s experience to apply its
policies in their countries but they must keep the following in mind :
 There are contextual differences between the countries, i.e. the GDP per capita for India
and China is lower because they have larger territories and huge population. Singapore’s
approach might be irrelevant for them if they do not adjust for these factors in their
policies.
 The countries must possess the political will to implement policies like anti-corruption
and have an effective public bureaucracy with civil servants free from any political
pressures.