Younger Singaporeans and Tax Burdens

Shanmugam is the law minister and also foreign affairs minister, and he is out of his depth outside of these areas. Recently, he is like me and most of us, he talked a lot of cock regarding income and tax. A $1,000 household income is enough to afford a BTO HDB flat after factoring housing grants. Of course one who knows his plebeian lot in life and is not fussy about a life-long mortgage can afford a 2-room BTO in some corner of Singapore with no MRT within walking distance, but not enough for food, transport, utilities for the family perhaps. Then a few days ago he said younger Singaporeans should not be burdened with taxes. Which is good in intention and I almost thumped my chest with my fist in affirmation to his ideals.

However, the law minister was talking specifically about Singapore's income tax, which is truly among the lowest in the world, and along with low corporate tax is part of the PAP's golden plan to bring in FDI and talents into Singapore. Nevertheless, Singaporeans young and old, are taxed in other ways. Tax by other names.

Consumption tax like the GST is one and it is especially hurting in its current form as there is only one level of tax for essential or luxury goods and services. True the current 7% GST is low compared to other developed nations e.g. the roughly 20% in Nordic countries, but GST is regressive taxation and the lower income are relatively taxed more than the higher income. Still the PAP assured that they would not raise taxes until at least 5 more years as part of an election vote-winner, so good thing there. BTW you know if we assume younger Singaporeans because they just entered the workforce and don't earn as much compared to those who worked longer, all things equal, GST means they are arguably taxed more even!

When the younger Singaporean buys a home. He is also taxed. The last I know stamp duty aka tax when one buys HDB or private property, is age-blind for first property owners. Stamp duty is progressive and can be hefty. As far as I know, there is no discount for "younger Singaporeans" who just bought their new home. Whether they should get a discount in stamp duty if they buy a BTO vs a resale HDB vs a private property is a different complex social-economic manipulation altogether. But the bottom line is, younger generation, lets say those below 30 or 35, are taxed as much as those who upgraded their property (excluding investment property owners where there are various market-cooling stamp duties). BTW it is the same with property tax. I didn't know there was relief for "younger Singaporeans".

Keeping an eye on the ball, younger Singaporeans are already burdened with tax, just the same, if not more, than older Singaporeans. And Shanmugam.defended that younger Singaporeans should not shoulder a bigger tax burden for the less privileged in Singapore. Of course not, They should't. The more well-off should shoulder that burden instead.

Younger S'poreans should not be burdened with taxes: K Shanmugam
By Dylan Loh | Posted: 11 March 2012 1827 hrs

SINGAPORE: Law and Foreign Affairs Minister K Shanmugam said that the government does not want younger Singaporeans to be saddled with tax burdens, even as the elderly are looked after.

He said it's important to balance the country's revenue and expenditure.

Mr Shanmugam was responding to the recently concluded Budget Debate in Parliament, at the sidelines of a community event at the Nee Soon Group Representation Constituency.

Mr Shanmugam said the government wants a society which looks after one another, especially those who can't help themselves.

"There's a lot of debate on whether you can survive in Singapore on S$1,000 or S$850. We don't want anyone to earn that amount, which is why we give opportunities for people to upgrade themselves. And education is made, literally free, for those who can't afford to pay for it," he said.

This year's doubling of health care spending and help for the low income as well as disabled, all point towards an inclusive approach.

But at the same time, the accounts do not go unchecked.

Mr Shanmugam said: "When I talk to my grassroots leaders, I just did a walkabout in my constituency, we also have to send another message, which is that, only about 50 per cent of Singaporeans pay taxes.

"And you look at all the other fees and everything else that's collected, in terms of what the government gets, and what it spends, it's all in the book.

"And today if you look at it in those terms, in terms of the revenue and expenditure, it is something the government has to be careful about."

Mr Shanmugam said currently a significant part of taxes are paid by foreigners who are easily mobile, and by the better-off.

But the government also ensures that tax rates in Singapore remain competitive.

And rather than increasing taxes, he noted that the government would rather people keep their money and support those in need, for a truly inclusive society.

He said: "We keep our tax rates competitive, 20 per cent at the top rate. Hong Kong is 15 per cent. If you go to UK, US, you know what their tax rates are?

"You're talking about 40 per cent, 50 per cent, people are talking about even higher. We don't want those kind of rates.

"We rather people keep their money and spend it as they like, buy insurance for their health and at the same time the government supports those who despite all the help, still need further help. So inclusive society."