How is it possible that we have the highest budget surpluses per capita in the world, with a very low tax rate and huge increases in social spending?
I refer to the article “Balancing social spending with financial prudence” (Straits Times, Apr 30).
It states that “In Singapore, the issue of how to help the needy was also a focus during this year’s Budget debate.
Finance Minister Heng Swee Keat announced an impending rise in social spending on healthcare and the need for an increase in goods and services tax (GST) to help finance the increased expenditure.”
As to “For instance, in 2016, the Government spent almost $14,000 per year to subsidise the school fees and expenses of each secondary school and Institute of Technical Education student, according to data from the Department of Statistics. This is around $16,000 a year for a junior college or polytechnic student, and nearly $22,000 a year for a university student. The Government also heavily subsidises healthcare and public housing costs” – the surpluses of one of our public universities alone was about $1.4 billion in the last three years (“University fees up 7% p.a., surplus $1.4b, expenditure up 2%?“, Apr 29).
As to “According to the Organisation for Economic Cooperation and Development (OECD), Britain’s social expenditure was around 20 per cent of its GDP in 2016; Finland’s was 31 per cent; France’s was 32 per cent; and South Korea’s was about 10 per cent” – you can see that Singapore’s is the lowest among the countries cited.
With regard to “Their citizens need not worry about education or healthcare costs as these are completely funded by the government.
However, to fund these welfare programmes, taxation is high. The average working Finn who earns €40,000 annually pays about 40 per cent of his salary as tax. In Singapore, a middle-income worker earning around $55,000 per year pays 3 per cent of his salary as income tax” – we may have very high and unique indirect taxes like GST, COE, etc, which has made Singapore the most expensive city in the world for the fifth year running, according to The Economist.
“Taxes” that are Uniquely Singapore?
I think the problem with the debate as to whether lower and middle-income Singaporeans pay relatively less taxes, may be that Singapore may arguably be unique in some of the ways in which we define taxes, or rather what are not taxes, and what constitutes benefits, compared to other countries.
For example, paying just 2.5 per cent interest on the CPF Ordinary Account, may be considered as the mother of all taxes, since historically, some of our CPF funds may have contributed to Temasek’s 16 per cent per annum returns from its inception, and the Government Investment Government’s (GIC) returns from its inception.
Are there any other countries in the world that pay such a low interest on the people’s pension funds?
Which other countries in the world makes so much money on its public housing by linking ever rising prices to market prices, and charging land cost to market rates, instead of the costs of building them?
Is this not like another “indirect’ tax on Singaporeans?
With public healthcare spending at about 2.2 per cent of GDP, which is one of the lowest in the world, isn’t the about 67 per cent of private healthcare spending against the 33 per cent of public healthcare spending, in an environment of relentless rising healthcare costs, like another ‘indirect” tax?
Other advanced countries may appear to have higher taxes, but the “indirect” taxes described above, would be absent or have minimal impact on the cash-flows of its citizens.
In respect of “While the actual amount of financial reserves Singapore has is not revealed for strategic reasons, it is estimated to be over $1 trillion.
When Mr Heng announced in his Budget 2018 statement that GST would be increased from 7 per cent to 9 per cent some time between 2021 and 2025 to fund increased government expenditure, which includes social spending, some called for the Government to draw on its reserves instead” – since social spending has gone up a lot and our tax rates are very low – how is it possible that the overall Budget surplus was $9.6 and $12 billion for FY2017 and FY2016, respectively?
We had about $30 and $200 billion of reported Budget surpluses and Cash Budget surpluses, in the last decade or so.
Why is it that the subject full page article and commentary on social spending and financial prudence makes no mention of our budget surpluses?
Is it any wonder why our Press Freedom Ranking is at 151st?
Leong Sze Hian