5/29/2008
Myth 181 - Low taxes
Our income tax has been lowered quite substantially. Estate Duty has been removed. Corporate taxes also lowered. And we have a free port where many things are tax exempted. Singaporeans must be paying the lowest tax in the world. Very true, for the very rich. The richer you are, the lower you are taxed unless you buy that yacht or that bungalow in the sky.
On the other hand there are many kinds of 'taxes' that Singaporeans are paying. CPF, Medisave, CPF Life, Minimum Sum are all taxes in different guises. Basically they take your money away, with a promise of returning them some time in the future. Even the choice of hospital wards is a kind of compulsory choice to pay.
Then we have taxes on cars, road tax, road usage tax called ERPs, petrol, COEs, TV and Radio Licences and all kinds of licences, Consumption Taxes on utilities, taxes to teach you and remind you water is precious, contributions to compulsory social services like CDAC, Mendaki, Sinda, and the all pervasive and comprehensive GST that go on top of all the purchases, including those already taxed, like cars, essential services, petrols, and whatever.
Is it really true that Singapore is a tax haven? For corporations and doing business, perhaps. For the people, what is the absolute amount of tax that the people are paying vis a vis say UK, US and Australia or even Malaysia?
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2 comments:
The very poor, from paying no taxes, now have to pay 7% GST. And to add insult to injury, the GST increase was trotted out as helping the poor! How ridiculous can an argument be put forward just to support an unpopular decision.
anon 1201 has got it right: taxes hit the disadvantage more than they do others. 7% GST is painful if you don't have a lot of money.
S'pore is a tax haven to "outsiders". But then so are many other countries. The USA (state and federal govts) imposes taxes on their citizens -- over 50% in total -- but to foreigners, the US is very tax-friendly, and therefore is THE biggest tax-haven in the world.
Same deal in Australia. Foreign capital gets all sorts of "breaks" which are denied to Aust citizens.
The tax code is designed to attract foreign investment. Unfortunately it is the locals who must "subsidise" the govt revenue-stream.
All taxes are bad, but the worst tax is the income tax, as it is a DIRECT TAX on YOU, the individual. We all have economic capacity, or ability, some more or less than others -- talent, skill, energy... etc. The Income Tax is DIRECT CONFISCATION of your "life force" (purchasing power) -- that part of you you must expend and exchange in order to live.
Say you work 40hrs a week (5 days), and the tax rate is 40% as it is in most developed countries. That means the govt CONFISCATES 2 days of your life every week. Over a working life of 40 years, the govt forcibly takes 16 years of your productive life... yes, your "life force".
At least on the global scale, the S'pore govt is "better" than other states on income tax.
However the new republics of the ex-soviet block are learning fast -- many of them have low income taxes. Russia is considering removing the income tax altogether.
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