I have had very good feedback telling me that the previous article on income taxes was an eye opener and was very helpful in understanding the economical climate of Singapore! I thank each and everyone of you for your thoughts!
As anticipated, and expected – the more skeptical of us raised the following remark: “It’s not the income tax that’s the problem, the GST and road taxes is where it’s very high!”
It’s not useful to just say that our GST rates are relatively low. Or that GST Credits and offset vouchers are available for the needy, let’s have a look at what people in other countries are paying:
Notice the word “transfers” above, under “expenses”. This refers to: Growth dividends, GST credits, GST vouchers, U-Save rebates, SCC rebates, Rental rebates, Workfare, CPF medisave top-ups, Child Development Credits, Top-ups to Edusave Accounts and Post-Secondary Education Accounts, public transport vouchers, funds for self-help groups, CCCs, VWOs, Jobs Credits, Productivity and Innovation Credits, SME cash grants.
They also include transfer to the Bus Services Enhancement Fund, the Special Employment Credit Fund, the GST Voucher Fund, the Community Care Endowment Fund, the Medical Endowment Fund, the Eldercare Fund, the Lifelong Learning Endowment Fund and the Edusave Endowment Fund.
$56b. That’s how much this country costs to run – everything from charity, aid, defense, street lighting, maintenance, health, subsidies. New roads, new expressways, new MRT lines. All this costs money. A lot of money. It’s an unromantic subject, maybe ugly to talk about even – but it’s very real and sweeping this subject under the carpet is not going to make it go away.
Japan just doubled their GST this year to get money to fix the aftermath of the Tsunami. Sweden is 25% tax and my Swede friend is fine with it because all their healthcare, childcare, education are taken care of by the country. On top of that, their income tax is about 50%?
Would Singaporeans be willing to live with 25% tax and 50% income tax in return for their healthcare, childcare and education being taken care of? Our Govt wld definitely be able to make this work if people are willing. But a lot of people want the state to give everything at no additional cost to them. They figured, as trumpeted by the Oppositions, why not just take from our reserves? I know we have a big reserve but it is not unlimitless. In order to get something, you got to give something up. People are not willing to do that.
I do not agree with you. If the govt tax singaporeans at 50% but provide everything else foc, why not? The fact is people in Singapore are earning peanuts and yet everything is taxable. Its common sense to note that our GST is low because Singaporeans are earning so little. How do you expect the govt to increase the GST.Switzerland’s tax is at 8% and a person working at a cafe earns $6k a month.
Hmm, if you think it is ok to pay 50% tax, we can’t disagree with you.
But here’s an article about why our income is low, plus problems with the gini coefficient:
http://fivestarsandamoon.blogspot.sg/2010/11/singaporeans-have-low-wages-compliment.html
Interesting…
The tax revenues does not include the profits that the government makes on the HDB. It costs much less to build a HDB flat than the price that it sells to the buyer. It is not counted as revenue, but it is still money going to the government.
The GLCs also make a profit, right? If you go to a hawker stall, you pay $5 for noodles, $1 or $2 goes to rental. Rental goes to Capitaland or Mapletree, and turns up in the “investment returns” part of the ledger.
Good that you raised that, HDB is a loss making department. Last year it suffered a deficit of $2b.
GLCs make a profit yes, of which some 10% is dedicated to the budget (see above illustrations..or earlier article). The other 90% goes back into the reserves.