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:
GST or VAT is a “pay as you use” tax. So if you don’t use, you don’t pay. (I am aware that there exists the idea of not charging GST for essential items such as food. We’ll leave this for another article another day) If you’d like an idea of how much of your GST is going into Government coffers, have a look at the previous article.
Ok. With that taken care of, let’s have a look at the most annoying “services” we pay to the IRAS. (And for the record, I hate ERP as much as you do) But to put things into perspective, we thought it appropriate to show you the total amount the country has collected in 2011:
Again, $7b and $8b make little sense when seen on it’s own.
To get an idea of it’s scale; the entire Circle Line project costs an estimated $7b.
The most glaring question at this point is this: What about the Government Investment Corporation (GIC) and Temasek Holdings? How do they come into the picture?
This shows a fuller picture of our current fiscal position.
Without Investment Returns (from the GIC etc), our budget would be approximately $6 billion in deficit.
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.
Source: Ministry of Finance, Singapore. GST/VAT rates from respective country’s finance ministries websites.