It has been a common argument that the Singapore government is unable to increase public social spending because of our low tax rates, and that the Nordic countries are able to do so because of their high tax rates.
However, what are the hidden things which are not said?
Tax Rate is Low. But CPF Monies is 4 Times Higher Than Tax Revenue
Firstly, even though Singapore’s tax rate is seemingly low, it doesn’t include the CPF or retirement funds, which the Nordics do include in their taxes. Our CPF is 4 times the amount of our tax revenue. So what this means is that our reserves is at least 4 times higher than the tax revenue. And that’s not taking into consideration the other sources of income the government has.
Singapore: One of The Lowest Social Spending (% of GDP) in The World
Secondly, it has been shown that, at least for healthcare, Singapore spends one of the lowest proportion of GDP on social spending in the world.
So, if we look beyond the government’s reasoning, or may I put, excuse, the government has a lot more wealth than it claims, that it collects from taxes. Also, the government is spending a very low proportion on social spending.
The government has effectively created a system where tax revenue remains low, through diversifying their income collection sources beyond the collection of taxes, so that they can then argue that since tax revenue is low, by their structural implementation, then spending has to be necessarily low.
But the government has created a system which necessarily favors it, for it’s own arguments. So, does the government have more money than it claims? I would think so.