myth 14

'Singaporean pays the lowest tax' This is the myth that Singaporeans are believing. Yes, in income tax alone, we may have one of the lowest rate in the world. But in real terms, the amount of tax a Singaporean is paying is very high especially at the bottom rung of society. The poorest segment of our society, the people that need help, pay the full GST. Everyone, from the baby to the retired and jobless old man/woman, pays tax in the form of GST. In many countries, there is no income tax on the poor. And also no GST. We are perhaps one of a kind in this world to tax our poor.


Anonymous said...

Please quantify with figures how much tax Singaporeans are actually paying. Please do also name the countries that you had in mind that do not tax the poor and also does not have GST.

Anonymous said...

some countries i know do have GST but essential food stuff like milk, rice etc are exempted from GST.

redbean said...

just to give you a simple example. a singaporean earning 12K a year will have deductibles like 3k for personal income, 1k for wife, 2x1.5k for 2 kids, and deductibles of 2.4k for cpf. these are basics. could be a bit more. so taxable income is 3.6K. say 3%, so tax payable is about $100 or less.

assuming that a small family like this will spend all $12k to get by and gst is 5%. amount payable for gst is $600.

total tax payable is $700! for a monthly income of $1k.

i have been screaming my head off for essential foodstuff and essential services to be exempted from gst. so far in vain. nobody seems to hear this or think it deserves a second look.

Anonymous said...

$700 / $12000 = 5.8%. You call 5.8% high ? What do you think it should be then ?

Anonymous said...

Forgot to add that the issue of exempting food from gst has been beaten to death so many times already so I am not surprised your ramblings are falling on deaf ears.

redbean said...

when i throw a dinner, the bill may come $1,000. my tips are normally 10% or in this case $100. small change to me as it is a common practice.

at the hawker centre, this guy would think very hard whether to add another piece of meat to his order of mixed vegetable rice. it would cost him $3.50 instead of $3. another 50c! finally he decided that he would forget that piece of meat to save 50c.

do you think this guy is stingy or that it is silly for him to think that 50c is such a big deal?

for a family of four, a $1000 monthly income is a big squeeze. he can barely make ends meet. is $700 for tax a lot of money?

what about the guy who pays 20% tax of his $1 mil income? he pays $200k as tax!

who is having hardship? who is suffering?

as a private individual, the lesser the tax the better for me. as a business, i too think likewise. and it will be better if everyone pays tax so that i can pay lesser tax.

as a govt, the considerations are different.

redbean said...

forgot to add. the 3 hour dinner expense is more than the income and expenses of a family of 4 earning $1k. and they need to stretch it over 30 days and still find money not enough.

Anonymous said...

Exactly, for a govt they have more things to take into consideration, sometimes their actions aren't necessarily in congruence with what the common man wants but they have to take the big picture.

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chrischoo said...

As far as I'm aware, IRAS only taxes income exceeding $20,000 per year. This automatically exempts those who earn $1,000 - $1,650 a month from paying any form of income tax.

Comparatively, GST is also reasonably low, although I agree with the notion that essentials should not be GST-taxable. Also, please remember that not all businesses charge GST - This only applies if the revenue of the firm exceeds $1m. If families buy their stuff from the mini-marts, they're not likely to pay GST. Even then, the large supermarkets have lower prices after factoring in GST, so it isn't as bad as you say it is.

It's quite an exaggeration to say that our low-income earners are heavily taxed.

redbean said...

hi chrischoo,

welcome to the blog.

this topic started with the myth that singaporeans pay low taxes.

i was just trying to give examples to show that the people who are paying low taxes are the richer singaporeans. not a bad thing. i like that too.

as you said, singapore only taxes those earning above $20k. but this is not really true as the tax is transformed into another kind, ie gst. the system of gst taxes everyone who consumes. an infant who is delivered in the hospital, see a doc, take infant milk powder, already starts to pay gst.

taking mrt or buses, the poor man's transport, are also taxed.

the issue is not that the poor are heavily taxed. the poor should not be taxed. it is immoral to tax those who are unable to make ends meet. this is not just plain economics but involves values, ethics, morality and simple human decency.

it is very neat and efficient from the economists and administrative point of view. a simple system of taxation that applies to all, everyone treated equally. you pay tax when you consume.

the difference between humans and animals, or humans with a heart and those without, is how we treat our less fortunate members of society.

or is it better to adopt the attitude that those who are less able it is their fault, lazy or stupid? a gracious society is one that gives when it can, to those who need help. to tax those who need help is not an ethical thing to do.

and our system is flexible enough to be able to discriminate and differentiate and help those who need help. why don't our society be kinder to them when we can?

Anonymous said...

Basically, you are advocating welfarism.
If so, advice so as the GST or VAT in the USA/NZ/Aust is based on the amount consumed and at much higher rates.
However, food stamps or dole is given for people below a certain income level.
Further, if you do not have medical insurance in USA/Aust/NZ, you will be liable.
I would suggest that this would result in a higher tax charge due to the inherent bureaucarcy involved.

redbean said...

welfarism is everywhere. only a matter of degree.

what we are practising now is to charge or tax everyone using gst and market prices for almost everything including all basic necessities. it ended up with good profits and surpluses in taxes.

then the govt coughs it out in the form of comcare, social welfare or whatever and ask the people to come forward and beg for it. then the govt can play the role of the rich philantrophists and dish out doles to the long queue and grateful beggars.

another way is to work out some subsidises or remove gst from basic necessities. this will lessen the burden of some of the people, not all, and lesser people need to embarrass themselves as beggars for govt subsidies.

i am more for the latter option as it gives some respect to the poor folks. let's not have sweeping gst and market price mechanism only to make more people to beg for assistance.

Anonymous said...

The myth is only in your head, redbean. Someone asked in the other blog entry about how to define poor and you went round the mulberry bush with mumbo-jumbo about needs and wants. Let me put it to you here then. How do you classify someone as poor ?

redbean said...


my definition of poor, like you say, is mumbo jumbo.

please enlighten us with your profound definition of poor. i am sure everyone here will be very interested to benefit from your wisdom.

Anonymous said...

Well, redbean, I am not the one arguing for the poor not to be taxed. You are, so over to you.

Anonymous said...

To answer,
My prefered viewpoint approach would be the same as the present govt approach with tweaking looking at the real situation and to possibly cater for sandwich class.
No subsidies as only businesses or big consumers benefit eg look at sugar/rice up North.
Taking your example.
No GST for rice.
4 million people take S$100M of rice for consumption, GST is S$0.5M. A smart businessman will use such savings for his food industry instead.
Rather, provide eg food stamps for food, low cost housing, education, retraining, public transport vouchers.

Anonymous said...

The problem with that approach as has been dealt with at length many years ago is to identify who the qualifying people are. Do you just go by income as declared to IRAS ? The problem with this is you could possibly get someone whose declared income being $12k pa but having a million dollars in the bank qualifying.

Anonymous said...

redbean, if you feel so strongly about this issue, go and join a political party and argue out your points. Arguing in cyberspace will not get you anywhere.

redbean said...

actually i am crying crocodile tears for the downtrodden. but at least i still have some tears left. many can only laugh.

and i don't blame them. if i have all the millions, all these people who cannot look after themselves are irritants. just pay them some lip service when people are watching. but go home and enjoy the best the world can offer with the millions one possesses.

but when one acts, one must appear genuine. or else when people find out can be very embarrassing.

ok, down with the downtrodden. make them pay more gst and taxes. we must lower tax for the rich. they deserve to make all the money and in return they provide more employment and opportunities for the jobless.

we must value the able and successful.

hahaha, i think this is the most honest statement to make huh? i am sure you like it.