I don't think anyone like taxes other than the legislative bodies that impose this form of payment :-) Having said that, taxes are essential for a government to balance its budget. A lousy government does a bad job of doing so, thereby having to increase its burden on its people. A good one manages to keep every aspect of life in perspective, thereby balances its income and expenditure. Very much like an individual.
The major part of taxes collected by government comes from two sources:
Corporate or company tax
Income tax on individuals
Corporate (Company) Tax In order to have a balance approach thereby attracting foreign investment and a thriving business environment for its local businesses, a country needs to look not only at what it needs and also what its competitors in the region are offering. Hence, it is quite common to find countries with similar background and attractiveness as an investing country to have somewhat of a similar tax structure.
For example, Singapore competes with Malaysia and Hong Kong for foreign investments, hence it needs to consider what the other two countries are charging as far as corporate tax is concerned. It can opt to encourage foreign investment by offering incentive for the first 10 years for whichever industry it is trying to encourage. Generally though, its corporate tax cannot be too high from those of neighboring countries. If it becomes too expensive for entities to invest, it will lose those investment. On the other hand, if its too attractive, then it will lose in terms of taxes collected. A balance is essential.
Corporate taxes in South East Asia ranges from the average of 20% to 40%. I didn't really go and make a comparison since I'm not a tax accountant. My perspective and knowledge is that is is a lot higher in the western world. Just recently though, I heard on the television that taxes in China is 2nd highest in the world. I'm not so sure how true this is but it certainly makes me think about it.
Income Tax on Individuals In Asia, there is no doubt that income tax is a lot lower than in the U.S., Canada and Europe. Part of the reason is that people here do not have social securities or medical insurance. As an Asian, in rainy days, you are responsible for your own living. No government handouts. One of the reasons why saving rate is high here too.
Now that foreign governments are really not doing a great job of providing security (since some like Greece & U.S. are practically bankrupts), it does make one wonder how collecting high taxes is justifiable. Will there be a day when the rich needs to subsidize the poor in the country? I don't know. We will see (yes, we will definitely come to see the future of that happening, I'm afraid).
Generally, in Hong Kong, the rate is 15% (if I'm not mistaken). In Singapore, it varies. Majority of the population don't pay income tax. Only 10% pays. That's one reason why Singaporeans travel quite a bit. Don't think it's a paradise though.There are other ways the Singapore government has managed to earn from its citizens and residents though. This takes me to the points below.
Other Taxes The U.S. might not have GST but in some countries like Japan, Singapore and Canada, there is a Goods & Services Tax which ranges from 5% to 8%. In other words, every time you go shopping or eat out, you'd be charged for it. Japan - 5%. Singapore - 7%.
In the U.S., there is the State Tax which most of you are familiar with. I did mention that in Singapore, the low income tax allows its residents to have a high disposable income. However, there are 2 items that are most expensive in this country and that its citizens cannot live without. An apartment (be it condo or government housing) and a car. So, being a smart government, it extracts a high rate of taxes on these 2 big ticket items. Now you get an idea of why it managed to accumulate such a high saving for a small country. If you choose to just work here and not own these 2 items, you'd be doing quite well. The only thing is that you'd have to retire elsewhere! ;-)
Yes, that's Property Tax and Road Tax for the Singaporeans. There is something else akin to a tax in Singapore. It's known as a COE (Certificate of Entitlement). Essentially it is a tax on the purchase of car. It is a bidder system (on a monthly basis) for car buyers. Before you need to buy a car in Singapore, you need to bid for a COE (depending on demand, it can cost as high as $30,000 or just a few thousand when no one wants to buy a car). If you think Lexus is expensive, wait till you buy that in Singapore! Without COE, one cannot own a car in Singapore! By the way, that COE is only valid for 10 years! 10 years later, you need to replace it with a new one at market price!
All in all though, the idea is that no matter where you are living, you'll be taxed to death. You can't even leave a country if you owe its government taxes!
Do not forget that social order come at a price. Those roads you travel to comes from the government. Taxes are a necessary evil. Like it or not, you'd be taxed no matter what (even if you're not working! there are ways to tax you!). As they say, taxes and death are a certainty in life!
The day you die you'd also be taxed! Not to forget that governments actually have an Inheritance Tax on whatever you leave behind!!! If I were you, I'd make sure I spend all my money before I die :-p
Last but not least, it's April... that time of the year for filing for TAXES again!!! Good Luck!!!
“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increases,” the President told a crowd in Dover, N.H. on Sept. 12, 2008. “Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” When Obama made that promise in 2008, my inclination was disbelief. However, I pondered the Bush Tax Cuts which were set to expire during Obama's Presidency and … more
To tax (from the Latin taxo; "I estimate", which in turn is from tangō; "I touch"). Taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid). A tax may be defined as a "pecuniary burden laid upon individuals or property owners to support the government […] a payment exacted by legislative authority." A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government […] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."
The legal definition and the economic definition of taxes differ in that economists do not consider many transfers to governments to be taxes. For example, some transfers to the public sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments. Governments also obtain resources by creating money (e.g, printing bills and minting coins), through voluntary gifts (e.g., contributions to public universities and museums),by imposing penalties (e.g,, traffic fines), by borrowing, and by confiscating wealth (as communist governments often do when they sieze power). From the view of economists, a tax is a non-penal, yet compulsory ...