Refuting the ‘refute’ of the ‘149th’ Inequality Index?

Marina Bay, Singapore – Photo: Leonid Yaitsky via Flickr, used under Creative Commons License (By 2.0)Marina Bay, Singapore – Photo: Leonid Yaitsky via Flickr, used under Creative Commons License (By 2.0)

The ‘refute’ of the Inequality Index’s 149th bottom 10 ranking for Singapore, does not hold water

I refer to the article “S’pore refutes criticism over tackling inequality” (Straits Times, Oct 10).

It states that “Social and Family Development Minister Desmond Lee pointed out that while Singapore’s spending on healthcare and education may not be as much as other nations, the outcomes it achieves in these areas are significant, and better than most.

Citing global rankings, Mr Lee noted that Singapore is second in the world for healthcare outcomes and sixth for its healthcare system.”

As to “As for housing, 90 per cent of Singaporeans own their homes, and even in the bottom 10 per cent of households, 84 per cent own their homes. “No other country comes close” – Singapore has the most expensive public housing (ratio of price to income) in the world, and most Singaporeans may be using the bulk (55% as last reported in Parliament) of their CPF to pay for HDB flats, which may start to decline in value when they reach around 40 years old, and become zero by the end of the typical 99-year lease – which may also wipe out the CPF used to pay for the HDB flat.

With regard to “Singapore is second in the world for healthcare outcomes” – our private share of total healthcare expenditure at around a third, is the highest among the developed countries – which may mean that the financial burden of healthcare may be on the citizens, relative to the state.

In respect of “The Commitment to Reducing Inequality Index, compiled by non-profit organisations Oxfam and Development Finance International, ranked Singapore 149th out of 157 countries – below Ethiopia and Afghanistan, and above Bhutan and Haiti.

The index measured each country’s commitment to reducing inequality by looking at its social spending, tax policies and labour rights.

The report said Singapore’s tax system was the worst in the world at tackling inequality because it “undertaxes wealthy individuals and corporations”. The personal income tax rate for top earners here is 22 per cent, while corporate tax is 17 per cent, both of which are too low, the report argued.

Mr Lee responded: “Yes, the income tax burden on Singaporeans is low. And almost half the population do not pay any income tax” – the CPF contribution of up to 37% of income may be akin to an ‘implicit tax’, as the Government has unfettered use of the funds and keeps a significant portion of the returns derived from investing our CPF.

As to “”Yet, they benefit more than proportionately from the high quality of infrastructure and social support that the state provides”” – our social welfare spending as a percentage of GDP is the lowest, among all the developed countries.

With regard to “He argued that while the report assumes high taxation and high public expenditure reflect commitment to combating inequality, it is more important to look at the outcomes achieved.

“We set out to achieve real outcomes for our people – good health, education, jobs and housing – rather than satisfy a collection of ideologically driven indicators.”

While Singapore does not have a minimum wage – another point of criticism – Mr Lee said it does have income support for low-income workers, generous schemes for worker training and a progressive wage model for certain low-wage jobs.

Both lower-income and median households here have experienced faster income growth over the last decade than those in most countries, he added” – our 10th percentile income is the lowest among all the developed countries, and the income growth in the last decade is based on ‘including employer CPF contribution’, which arguably is not actual disposable income which the people can use for their living expenses.

In respect of “”That we achieved all of this with lower taxes and lower spending than most countries is to Singapore’s credit rather than discredit”” – our reported Budget surpluses and cash Budget surpluses in the last decade or so, is about $30 and $190 billion, respectively.

Leong Sze Hian


About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.