The PAP government in Singapore keeps masquerading to Singaporeans that tax is low in Singapore.
Indeed, the personal income tax that Singaporeans pay on a per capita basis is low – it is one of the lowest among the highest-income countries.
However, what the PAP does not tell you is that Singaporeans pay much higher indirect taxes and high social contribution rates.
In fact, Singaporeans pay more than 4 times higher indirect tax than personal income tax. Where other high-income countries pay about the same amount of indirect tax as personal income tax, Singaporeans actually pay more than 4 times more.
Not only that, Singaporeans also pay more than 3 times higher social security into the Central Provident Fund (CPF) than personal income tax. Again, where other high-income countries pay much lesser into social security or on average, about the same as personal income tax, Singaporeans are made to pay more than 3 times more.
In total, Singaporeans thus actually have to pay nearly 8 times more into indirect tax and social security than personal income tax. This is when other high-income countries only pay an average of about twice as much or at most four times as much than personal income tax.
So, you see, it is not true that Singaporeans pay low taxes. The income tax rate is low but what Singaporeans have to pay into indirect tax and social security is nearly 8 times more, which is a lot.
The PAP keeps saying that personal income tax is low and thus Singaporeans should be grateful. But this is how the PAP is trying to trick you. Personal income tax is low but it is not for you. Only a very small and select group of people benefit from the low personal income tax – the rich.
Indeed, Singapore’s top personal income tax rate is the lowest among the developed countries – 20%.
But do you know even the highest income earners in Singapore do not have to pay the top rate of 20%? In fact, for someone who earns US$300,000 a year in Singapore, he or she only need to pay 14.1% – which is much lower than what a similar income earner in the other developed countries have to pay, and is also the lowest among the developed countries.
Not only that, when compared to the top tax rate of 20%, a US$300,000 earner in Singapore only needs to pay 70.5% of the top tax rate. This is the lowest proportion among the highest-income countries, where a similar income earner would have to pay an income tax of about 90% of the top tax rate. In other words, high-income earners get to get away with it, more than the other developed countries.
In comparison, for the majority of Singaporeans, we have to pay 37% of our wages into CPF. As compared to the rich who only have to pay 14.1% of their salaries into tax, the majority of Singaporeans are sacrificing more than twice as much into CPF.
There is the rhetoric that the CPF is not tax but as I will show you soon, the CPF is a tax and the majority of low- and middle-income Singaporeans are paying more than the high-income earners, the PAP among them, into tax.
So, you see, personal income tax rate is low, sure. But it is not for you. It is only for the very rich. Not only is personal income tax low for them, it is the lowest among the developed countries.
Source: Roy Ngerng