Dirk Löhr: Singapore shows how a good tax system works
“High ancillary costs weaken the competitiveness of less qualified workers. A future-proof tax system works differently. Singapore shows how. Here, 90 percent of the land belongs to the state. This draws a significant portion of its revenue from the allocation of land use rights. Thus, profits from location advantages are skimmed off in an economically harmless way. Because these profits arise regardless of whether they flow into private or public coffers – quite unlike the classic taxes, where one must fear that the profits will decrease if the state takes a part of it. In the Singapore model, citizens are relieved of these taxes, which is likely to have a significant share in the economic success of the city-state. The skimming off of profits from location advantages can be sufficient to finance the entire fixed costs of the municipalities. This is stated by the Henry George theorem developed by Nobel laureate Joseph Stiglitz and others.”
– Dirk Löhr, Professor of Tax Theory and Ecological Economics at Trier University of Applied Sciences, in “Taxing Unearned Income”, “Homo Oeconomicus” section, Handelsblatt December 16, 2020