TL;DR – After all, we pay so much taxes, right?
If you are a Singaporean aged 21 or older, you probably would have received some money credited into your bank account for doing absolutely nothing. This SG Bonus was announced in Budget 2018 as part of the government’s “longstanding commitment to share the fruits of Singapore’s development with Singaporeans.”
The SG Bonus comes on top of other “free money” such as the up to $380 GSTV – U-Save rebate and up to 3.5 months of S&CC rebates that eligible HDB households can receive in 2018.
And there’s also the $8,000 to $10,000 Baby Bonus Cash Gift for parents of newborns, up to $18,000 in matching contributions by the government for the child’s Child Development Account, and $500 SkillsFuture Credit for Singaporeans aged 25 and above. The list goes on.
My point earlier about us receiving payouts such as the SG Bonus and GSTV – U-Save for “doing absolutely nothing” is fairly contentious of course. There are people who feel that such “free money” come from the taxes we pay, and what we are getting back is simply our own money.
Some even say that the government gives out a chicken wing only to take it back later.
But is it really the case that the average Singaporean pays more in taxes to the government than what he gets back in terms of government services and benefits?
From 2011 to 2015, we know the government invested more in our healthcare, transport and social support systems through plans such as Pioneer Generation Package, and the enhancement of Workfare. Names and terms few may remember, but nonetheless very real schemes, helping many people.
With an ageing population and an increasing chronic disease burden in the coming decade, healthcare spending has more than doubled, with the building of more hospitals and other healthcare facilities like the newly opened Sengkang General and Community Hospitals. There’s also been increased healthcare subsidies like MediShield Life, which all Singaporeans get to tap on for life.
Over the past seven years, infrastructure spending has also more than doubled to an estimated $20.0 billion. This went into the building and upgrading of HDB flats, expanding and maintaining our rail and bus networks, and keeping public transport fares low for Singaporeans.
The annual subsidies for keeping Singapore’s buses and trains running over the next five years are more than enough to pay for a good meal at the food court for 5.8 million people for a year! And with over 7.2 million bus and rail rides on average each day in 2017, many of us are benefiting from the public transport networks and the low fares every day.
There’s also more investment in security to keep Singapore safe, given that the terrorism threat to Singapore is at its highest in recent years.
Ever recall seeing or taking part in more SGSecure activities like simulated attacks at hospitals and shopping malls, Emergency Preparedness Day at your CCs, and calling for enrollment into free CPR-AED and first aid courses? Yep, these are just the tip of the iceberg.
The Ministry of Education is also sustaining focus on education in order to give our young a good start. Just look around us. More pre-schools are springing up, and more funds are going the sector to improve the quality of the education, to give every child a good foundation from a younger age.
As the Prime Minister announced last year, the government will spend $1.7 billion per year on the pre-school sector by 2022 – double of our annual spending now.
We do know that taxes are necessary for a country to function. After all, money doesn’t fall from the sky, and resources and planning are required to sustain our country growing healthcare, infrastructure, security and education needs. And what you get isn’t just in terms of what goes direct into your bank account. It comes in so many other ways.
(Here’s a quick video on how taxes are used, by Civic Academy SA. You might want to watch the first 2:10 mins for some background understanding.)
This is Singapore’s overall Budget Balance for 2017 and 2018,
And it looks like we are on a sound fiscal footing, as economists might say. No doubt that this is a result of the 7% GST and personal income taxes that we pay.
But to put things in perspective, for a developed country, our taxes aren’t exactly very high. For example, the sales tax rate is 25% in the world’s most “liveable country” Norway, and top income tax rate exceeds 40% in countries like the UK and Australia for the highest income-earners for 2018. For the rest of the wage-earners, the rates fall between 19% and 40% in these two countries. In comparison, the tax rate in the highest income bracket in Singapore is only 22%.
(In fact, after factoring in the various reliefs and rebates such as the Working Mother’s Child Relief, Parenthood Tax Rebate, Parent Relief and Course Fees Relief, we don’t actually pay thaaaaatttt much in taxes.)
So where does all the money come from to pay for the many public goods and services which we are enjoying every day, if we aren’t actually paying that much tax compared to many other countries?
Taxes, fees, charges and others are estimated to contribute $72.68 billion to the Government’s revenues in 2018, but the expenditure is estimated to be $89.1 billion. In comparison, government expenditures in 2011 was $55.0 billion. Today, the shortfall is met by contributions from the investment returns from MAS, GIC and Temasek. This has taken over corporate tax collection as the largest contributor to government’s revenues since 2016.
That’s right. Without the contribution from the reserves, the government isn’t even raising enough from taxation to fund its spending plans. We’d be in deficit.
But with some careful and prudent planning, the government has taken different steps over time to improve the lives of Singaporeans. As our country progresses, the lower-income is not left behind either.
More than 70% of Singaporean households receive more social transfers from the government than the amount we pay in taxes. And those in lower-income households get more. That’s $4 in benefits for every $1 of tax paid in 2016.
Considering the “free monies” we receive and the public goods and services which are not all funded by taxes that you and I pay, do you still think the government gives out a chicken wing but takes it back later?