Date of Award


Degree Type


Degree Name

Doctor of Philosophy


This thesis analyzes tax policy options for Singapore. The first three substantive chapters evaluate the efficiency and distributive impacts of various tax alternatives using a static numerical general equilibrium model. One notable difference of this study from major general equilibrium tax studies for other countries is that instead of using the arithmetic sum of the Compensating and/or Equivalent variations across households, welfare impacts are evaluated using the concept of potential welfare gain/loss, based on Kaldor's (1939) weak compensation principle. The cost of tax distortions is sensitive to the criteria used to evaluate efficiency. To analyze the general equilibrium impacts of mandatory savings, a feature of special importance in Singapore, the static model is extended to incorporate endogenous saving behaviour.;Another distinguishing feature of this study which differentiates it from others is its special emphasis on the effects of alternative tax systems on the performance of the traded sector. The interaction between tax policy and trade structure is particularly important for a country with a large volume of trade, like Singapore. The analysis of this issue in chapter 4 is a novel contribution, because traditional tax policy analysis does not examine trade impact but mainly studies the efficiency and distributive effects of taxes and the effects of taxes on variables such as output or primary factor allocations. This thesis attempts to empirically study the general equilibrium interaction of tax policy and trade structure.;Finally, chapter 5 presents a theoretical framework to examine the tax treatment of financial intermediary services. The question of whether to include banking services in the tax base has received little attention from academic economists. A priori, it seems straight-forward that (if leisure is exogenous), for a broadly-based consumption tax, all goods and services, including banking services, should be included in the tax base. Numerical simulation results suggest that, in equal yield comparisons, a tax on goods alone but not on banking intermediation services is preferable to a broader tax including financial services. While not proving that banks should not be taxed, these results challenge the conventional wisdom that they should be included in the tax base.



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