If most people can pay monthly maintenance fees for their condos, their HDBs, their club membership, their gyms, or pay a salary for helpers to manage their households, surely paying a sum for the maintenance of a country shouldn't be a problem. To run a country is not free and in order for any government in the world (except probably oil-rich nations) to function, they need funds (in the form of taxes) from their citizens. That's the most basic requirement that even the oppositions will have to concur (unless if they want to be populists and wouldn't mind drying up national coffer, increase national debt (which is currently considered "zero"), or targeting business entities for even higher tax (Singapore is among the world lowest).
On the side note, some will say think that Singapore tax is not low, considering that there are other taxes (e.g. goods & services tax, GST), and "monopolised" public transit, utility, etc., as well road tolls (e.g. Electronic Road Pricing, ERP), housing tax (higher when applied to second property owner to cool speculation). There will be people out there who will paint Singapore as not really that ideal a place to invest out of whatever reasons they could possibly have, e.g. David Cay Johnston (who is 2001 Pulitzer Prize winner during his short one week stay in Singapore surprisingly managed to gain an opposite perception that Singapore is not really low-tax haven for business; reported 2011). I wonder who could have been his source...
- First, other taxes, such as GST and any other incurred taxes can be claimed in Singapore by businesses;
- Second, Singapore is (unlike America) land-scarce and having daily traffic-jam problem will affect businesses and the daily operation in Singapore. To prevent that from happening, car prices are not cheap (considering that there is a cap/quota of the number of cars that can be on the road per certain period, and a bidding system to secure certificate of entitlement [COE] to get a car). If there is no COE and everyone can own a car, then don't complain about being stuck in traffic for several hours. If that happen, I can bet that Singapore will be in the news for having the first car in the world with state-of-the-art toilets on-board.
- Monopoly in public transit and other utility? Public transport in Singapore is operated by SBS and SMRT. The government through Temasek Holdings owns significant share in the business so that it will have a say in the management of our public transports (e.g. in matter pertaining to costing and business operation). Most will think that fare hikes is up to Tamasek, but in reality, fare hikes are due to operators' requests in reflection to either debt, operation cost, or profit margin (do note that a healthy profit margin in every business is motivation to continue operation). In many countries where mass transit is of utmost importance, government will never unwittingly increase fare if really necessary. To do so would be politically suicidal. Hence, fare hike is dependent on other factors, rather than whims of Temasek (e.g. oil price and operation cost). Similarly, control of utilities considered as crucial part of Singapore is owned by Temasek. I guess whatever that is considered as a National Security or Interest will be controlled (if not by regulation), e.g. water, power, communication, transportation, etc.
- ERP is placed at strategic places to prevent traffic congestion in the city (but there are sufficient roads that is not with ERP, especially those that is not connected to the city or jam prone areas). Note that not a lot of Singaporeans are into car-pool and the amount of cars plying the road to office will be bad if it is not regulated by ERP. How efficient is ERP? It will only be efficient when drivers start shunning away from these roads. In my opinion, taxi is also not the best means to beat the congestion, especially considering that taxi only take one customer per trip. It would be best if Singapore can invest more in improving the mass transit system (such as upgrades), so that it will be more efficient (less hiccups and more regular), spacious, comfortable, convenient, and affordable for all people.
- Property tax? If anyone say that property tax is high at 10%, read the whole story here, in which Singapore is battling to cool down property speculation, and hence several measures were taken. However, I do concur that property rent is high and this is one factor that is driving up prices (BUT it is unrelated to the subject of this blog, i.e. Singapore tax is low/the right taxes).
Singapore taxes (IRAS)
For locals (see IRAS explanation)
For a person with monthly income of sgd 3000 and annual income of 40,000 (plus bonuses and supplements), he will have to pay sgd 200 for the first sgd 30,000 and within subsequent extra sgd 10,000 block a 3.5% pa ratev(correspond to 10,000 x 3.5% = 350). The total would be sgd 550 per year of sgd 36,000 annual income.
If another person earns more than sgd 40,000, he pays sgd 550 per year, and 7% for subsequent additional sgd 40,000 block.
Someone that didn't pay tax "played played" (insinuated) by claiming that Singaporean paid between 0% to 35% without factoring in how much is the person being charged 35% is earning, and how much regular Singaporeans are really charged (my guess is < 5% for annual income of < sgd 80, 000). For the high-earner, he/she will be earning > sgd 640,000 per year. That's like > sgd 50,000 per month. To pay ~3% tax per monthly earning of sgd 50,000 is too much? That's just sgd 1500 for a month (equivalent to one night stay at Raffles Hotel) for these high earners. If that is bad in Singapore, how about the proposed and implemented tax amount of 75% pa for millionaires in France?
I will not cover taxes for businesses because I have no idea just how many taxes are incurred and what is claimable. That is best delegated to professional accountants. For your interest, refer again to IRAS Singapore for other taxes.
This is not income tax, but the famous Goods and Services Tax (GST) that people talk/gripe about. People complained about GST the most because it affects everyone. The aim of GST is to tax consumers based on their consumption habit (or indulgence). Singapore can't be selective in implementing GST (not sure why yet), and so a blanket GST is imposed on all goods and services, including medical care/hospitalization (for those opting "regular" treatment or ward, the GST is subsidized by the government).
Singapore is not money hungry towards its majority of citizens. If you think about it, the high earners are the one forking out significant amount of money to the National coffer, e.g. a night stay in luxury hotel costing 1000 will earn Singapore 7% (or sgd 70). In comparison, regular Singaporean eating out with a bill of sgd 100 only pays sgd 7.70 (or 7% of food item and 10% service charge). The darn service charge is even higher than the tax and we want to COMPLAIN? For a McD, a ~ sgd 5.00 McChicken meal only cost us 35 cents of GST. So who are Singapore government actually taxing the most? However, I do agree that there are several basic necessities that can do without GST, e.g. medication, essential medical service, basic food items, milk etc. which will be equally needed by the poor and rich. As I have mentioned, medication and medical help are subsidized but not for A-ward treatment. In addition, there is GST voucher to help the low income family to cope with basic necessities. If regular Singaporeans don't indulge as high earners do, the tax incurred would be relatively high for high spenders rather than regular family. That is why I don't go out for dinner at Shopping Malls daily, but rather at once a week. Eating at my favourite hangout that cost me sgd 3.00 for a three-dish rice (only cost me 20 cents of GST if that is even applicable here).
I agree that there is much to improve on the implementation of GST in Singapore. If everyone is contributing to constructive inputs and views, I believe we can come up with a sound GST to tax consumption based on indulgence rather than necessity (so as also to increase national coffer and allow better utility of the revenue in other aspect).
For those trying to be funny, I just want to say that COE, cash-over-valuation (COV) of property, ERP, car tax (only applicable for car owners and is considered wants rather than needs), and others are not considered as "regular taxes" that affect majority of people. Note that COV depends on buyer's choice to either accept or reject to the offer.
Just a thought