My dear Singaporeans,
Do you know the real reason why our government does not want to increase our personal income tax? Read on and make your own judgment.
Before that, the new year is coming up, so I would like to wish you happy new year! All the best for the coming year!
So, let’s proceed.
Right now, our personal income tax is anywhere between 0% to 20%, depending on your income range. The reason that the government has kept giving us for not wanting to increase our income tax is because – they say – we won’t be willing to pay. Such a magnanimous government, you think?
Let me put it into perspective for you – if they increase our personal income tax, this would eat into their own profits. The real reason isn’t because they care for us. It’s because they need to maintain their high profits.
How does it work? You see, fundamentally, for a company to earn more and more, what they do is to keep the wages of their workers low, and to keep increasing the cost of the goods and services they produce. In Singapore, the prices of goods and services have been increasing constantly. You don’t need to be a scientist to tell you that, I’m sure. You can see it. You can feel it. Our inflation has increased by around 4% to 5% for the past few years.
Thus already, companies are already earning more from us, just by increasing the prices of goods and services that we are made to purchase. Also, it doesn’t take a scientist to also tell that our real wages haven’t been increasing. If you look at our real wages after CPF contributions, it has actually not grown, but in fact, decreased on average, by 1.2%, since 2008. So, what has happened is that our real wages have decreased and the prices of goods and services have increased over the past few years. Which means – our purchasing power have been severely eroded, yet we keep buying things, with the imagination that the economy is doing well, or was, and that we should spend more, when what this means is – we are increasing the profits of the companies, but reducing our own savings.
The government has come out with a very good plan, haven’t they? Our GDP growth was very high in 2010 (14.5%) and in 2011 (4.9%), yet our real wages dropped and prices increased. And we continued to spend. Something wrong here?
Then, you might ask, what does this have to do with taxes?
Simple. You have to understand this basic idea – speak to another foreigner who comes from a country where their taxes are higher than Singapore and they will tell you, that when they negotiate for their salaries, what they do is negotiate for a salary that will be higher, so that it will account for the higher taxes. What this means for us Singaporeans is this – if our taxes increase, we will then start to ask for higher wages, to account for the higher taxes.
And where will this have to come from? The companies will have to pay higher overall salaries. Now, here comes the interesting bit. Why did I say by increasing our taxes, it will reduce their profits? Here goes – if you just look at the top 17 Singapore companies, most of them (about 85% to 90% at least) are owned by the government, through Temasek Holdings and possibly, GIC. Temasek has majority shares in many of them.
What will happen then if they increase taxes? Our overall wages will increase and they fear this – they fear that their profits will decrease, which it will. Well, then you might say. But they are our Singapore companies! We should let them make money! I mean, since Temasek and GIC owns them, the money will come back to us right? Somehow, right? And since Temasek and GIC belongs to the government, they will channel the money back to us right?
Ok, let me give you more background. Together, these largest and richest Singapore companies earns hundreds of billions in revenue and billions in profits. Billions, mind you. Not only that, the heads of these organizations each earn millions of dollars in income. And where does the money accumulated by Temasek go to? The shareholders, of course!
Not convinced. Let me remind you yet again of how your money – the CPF – is being used by the government. The government says that our CPF monies is actually invested in government bonds. They will give us, for our CPF Special, Medisave and Retirement Account (SMRA), either the interest that the bonds earn, add another 1%, or 4%, whichever is higher right? So, currently, the bonds earn 1.55%. So our CPF SMRA still earns 4%. Now, even though our CPF monies is invested in the government bonds, for the CPF Ordinary Account, the government will give us an interest pegged to the bank’s interest rates, which is a lot lower – 0.21%. Now, wait a minute, if our CPF monies is invested in the government bonds, why are they giving us a much lower interest rate from the banks instead, and not the higher interest rates from the bonds?
Oh, but wait, this gets even more interesting. Do you know that the government then borrows from the government bonds (which the CPF monies is invested in) and invests the bonds in GIC and Temasek Holdings, which are both owned by the government? Now, GIC and Temasek earns returns of 6.8% and 17% since inception. But yet – yet! – of the 6.8% and 17% interests, how much of this interest gets channeled back to the government bonds? – 1.55%. Doesn’t make sense right? If you earn all that interest, the government bonds only earn 1.55%? Do they think Singaporeans are stupid. Well, they do. Because no matter how many times I’ve written about this, not many people are able to figure this out yet. Not only that, the government hasn’t rebutted the countless times I wrote about this, and that others have as well. And they are still continuing to do it – not return more of the interest to us! And we allow them.
So, there – if YOUR CPF money is being invested eventually and earning such high interest rates, shouldn’t it come back to you somehow? Then, you might ask, but we don’t need all the interest to come back. Some of it should go into the reserves! I mean, the government says we need a strong reserves because what if something happens to Singapore, then we will need to rely on the reserves! Well, absolutely, I agree with you!
Currently, based on government-released figures, our reserves should amount to somewhere around $600 billion (The Monetary Authority of Singapore manages around $200 billion, Temasek around $300 billion and GIC at least $100 billion). The thing is, the government doesn’t release how much GIC has but they say GIC has assets well over US$100 billion, which means our reserves would be significantly more than S$600 billion. It could be $700 billion, or $800 billion, or even $900 billion. Anyhow, for 2012, the government budget is around $50 billion. What this means is that our reserves should be able to last us for another at least 10, 15 or even 20 years or more! Great! Our future generations are saved! Yet, all this money sitting inside and have you ever seen any of it, especially when we need it?
Let me put things into further perspective for you. As I’ve shared, our inflation rate has been rising at around 4% to 5% every year in the past few years, our real incomes have dropped over the past few years. Not only that, when it comes to footing for our medical bills, the proportion that the government spent has dropped from 51.4% to 36.1% from 2000 to 2009! This is a 15.3% drop!
So, in simpler terms, the profits of the Singapore companies have kept increasing, at the expense of what we earn and what we have to keep paying. The government owns the investment companies which are major shareholders of these companies, where the profits are given back to the shareholders and to the government, and a very minimal amount is returned to us for our CPF. And yet, the government further reduces how much they pay for our basic necessities, such as healthcare, and expecting us to pay more out of our pockets, with our dwindling incomes. Are you following so far?
So, at this point, tell me, do you think it’s all well that the government keeps the money in the reserves, or gives the money back to the shareholders, and not back to Singaporeans? – when our real wages are dropping, prices of goods and services that we pay for, including essential services are increasing, and yet, they reduce by so much what they should also assist to pay for our essential services. Now, can you tell me that it’s all fair that they keep the money in the reserves and not give even 1% or 2% more to increase the interest earned for our CPF? What I’m saying is this – by all means, earn from us. Earn because you need to increase our reserves and protect our future. And earn because you are a government operating in a capitalistic environment. All governments which are capitalistic want to profit from the people. So, by all means, do that. We can sacrifice. But when we keep sacrificing, and so little come back – what do you take us for? You keep taking and taking and then you give a small token back. Do we look like beggars to you, or do we look quite dumb? Well, obviously we do!
Let me give you even more background, if at this point, you are still of two minds. You know the schemes that the government has created which we can use to pay for our medical and healthcare bills right? – Medishield and Medisave. Do you know that this year, we have to pay more for both of Medishield and Medisave? For Medishield, we are required to pay a higher premium, for lesser coverage for each dollar paid. For Medisave, we have to increase the Medisave Required Amount by about 20% to $38,500. In fact, our Medisave Required Amount has been increasing by around 20% every year for the past few years – or cumulatively by 114% since 2008. Thing is, inflation has increased by around 4% to 5%. So, why does our Medisave Required Amount have to increase by 4 to 5 times the inflation rate? If healthcare costs increase by 4% to 5%, why are we made to pay more for our Medisave – 4 to 5 times more – than any expected increase? Add to that, our real wages have not grown, so WHERE ARE WE GOING TO GET THIS INCREASE IN MONEY TO PAY FOR THE INCREASE FOR MEDISHIELD AND MEDISAVE? Why are we paying 114% more to the Medisave Required Amount when our real wages have fallen? So far, you get the drift, yeah?
Then the ultimate question is this – why are we made to pay more for Medishield and Medisave, at many more times the inflation rate (much more than necessary), when our real wages are not increasing?? And at the same time, why are the profits of the Singapore companies increasing and increasing and the interest earned doesn’t get channeled back to CPF? Why can’t the government channel just 1% or 2% of the interest earned back, to cover for any increase for Medishield and Medisave, so that we don’t actually have to pay from our own pockets, when it means eating into our (decreasing) real wages further? Why? This is a simple, basic and very obvious question.
Do you see what they are doing? To me, it’s plain obvious that at this point, they are trying to earn as much off Singaporeans as they can. You see, the government is the largest employer of Singaporeans. At the are time, the companies that Temasek owns (and by extension, the Singapore government) owns, also employs a bulk of Singaporeans. Who determines the wages of Singaporean workers? The government says they leave it up to market demand and supply forces to determine how the wages grow, or not. Who determines the market demand and supply forces? I don’t think it take a genius to tell you the government determines our salaries. Now, if the government determines our salaries, why are they letting our real wages decrease???
Do you see what they are trying to do? They reduce our real wages, increase prices, increase their own profits, channel it back to themselves, reduce what they need to pay for our essential services such as healthcare, and make us pay more into CPF, Medishield and Medisave – FOR WHAT? If its not already obvious to you, I don’t know what is. Some commenters have already noted how they are very much taken aback by how PAP can be so unscrupulous to let Aljunied GRC languish without their own IT system, simply because PAP doesn’t want the Worker’s Party to succeed. And because they don’t want Worker’s Party to succeed, they are willing to let go of the needs of the thousands of Singaporeans living in Aljunied, all because they want to keep themselves in power? This is not new – they’ve been doing this to Hougang and Potong Pasir long before this. It’s basic decency to treat your people well, whether you are playing politics or not. So, people are starting to question – does PAP actually care for Singaporeans or do they only care for themselves? At this point, it’s very, very obvious to me. Not only that, do all they care about is our money?
In order countries, the banks and the rich control the government and the government bends backwards to them, while trying to balance the needs of the people at the same time. In Singapore, the government is the bank, the government is the rich. And the government doesn’t need to bend backwards to Singaporeans because they’ve effectively silenced Singaporeans. Not happy. Well, take whatever cake you have and stuff it down your throat. And we will go on steamrolling you over. Eat your cake and keep quiet, you ungrateful brat. Sounds like Cinderella, doesn’t it?
So, let me come back to the taxes again. So, why doesn’t the government want to increase our taxes? It’s not because we are not willing to pay. In fact, we might be more than willing to pay. If you look at the government revenue and government budget over the past few years, the government spends about as much as it collects in revenue. This means that whatever taxes we pay gets returned to us – in the form of government spending for healthcare, education etc. So, if we pay more taxes, it will just keep coming back to us. Not only that, because when we negotiate for our salaries, we will account for the tax increases, our purchasing power can still be maintained. There will be some adjustments in the short term but in the longer term, it will balance out.
Also, if taxes are increased, the government will spend more to subsidise for healthcare, for eduction etc. this means we pay less out of pocket. If you look at the other countries with higher taxes, this also means that healthcare or education can be at much lower costs or can be free.
Before I go, a friend pointed this out – I had previously written an article about how, if we include the proportion of our salary that is cut for taxes and CPF, the actual ‘tax’ we are paying is between 20% to 40%. This is actually comparable to some of the countries with high taxes. We are already contributing a high proportion of our salaries to the government – why isn’t it coming back to us in terms of higher social spending, or actually in terms of higher returns into our Medishield or Medifund, instead of having us to pay out of pocket?
The question of why some countries with higher taxes might be seen as not being sustainable is mainly because of this – they are not able to spend efficiently, or simply put, wisely. So, the question isn’t about how much taxes are collected, but how we spend the taxes collected. Right now, we are made to pay the same amount of taxes, but healthcare expenditure by the government has actually decreased. This doesn’t make sense, right? We are still paying the same percentage for our taxes. Also, with more people working, the overall income tax revenue should be increasing, shouldn’t it? Then why is healthcare expenditure by the government reduced? (Aside, we should pressure the government to give us an answer).
For me, it is clear that if our taxes increase, the government should then ensure at least a fixed percentage of (high) subsidy that they provide for essential basic services for the people, or even provide them for free. Currently, the government creates too many systems that Singaporeans have to maneuver just to claim their healthcare expenses, for example – through Medishield, Medisave and Medifund. (The creation of cumbersome and complicated systems is itself a method to prevent people from accessing the services, and thus reducing their claims, which in turns, maintains the monies inside the coffers.) It only then makes sense that the government gives a clearcut percentage of what they will foot the bill for, and let Singaporeans have a peace of mind when they pay from their own pockets, by knowing that it will be a much smaller amount, and also, by not creating complicated systems which we have to maneuver around, doesn’t it? This is very clear and direct, isn’t it? So, why does the government doesn’t want to do it?
If the government increase taxes, they have to increase our overall incomes. This will eat into the profits of their companies. They have absolutely no interest in doing that. They would rather let us think that we aren’t willing to increase our taxes because (they want us to think that) our incomes will drop, so that with this illusion in our heads, they can continue to profit from us inadvertently. Let me add to this – you know the Nordic countries have one of the world’s highest taxes, right? Yet, at the same time, they also have one of the world’s highest per capita GDP and personal incomes. Does having high taxes mean that our incomes will drop? I don’t think I need to explain further. Why does the government come out with the rhetoric that they cannot increase our taxes because our incomes will drop?
Why then, do you ask, is the government so fervent in their need to increase their coffers? Simple. The government knows its time is running out. Rather, PAP knows that its time of keeping people dumbed down is fading away and their mechanisms for blatant control is weakening. They want to make as much money as they can off us while they can, so that when indeed they have to compromise on their power or if they lose power, they would have siphoned off as much money as they can, by then, for themselves. And hopefully, because it might take us a few years to figure out the systems that they’ve created, we might not even figure out how they’ve done it. So, you can expect that for the next two to three years before the next election, the government will continue with this strategy – reduce wages, increase prices and increase our contributions to CPF, Medishield and Medisave. And in their minds, they feel that they’ve created an undefeatable system where we are not able to expose them, or to take them down, and they can continue in their unremorseful and defiant ways of manipulating us.
The question then is this – what will you do now that you know all these? Will you continue to sit and mop and say – I can’t do anything anyway. My government is in control of everything anyway. I don’t have power anyway. Are you going to say all these? Are you going to keep giving up on your rights?
Do you know why I started this blog? I had initially started this blog because I wanted to paint a fairer picture of what the government puts out. I want to show Singaporeans the other side of the picture. Then, as I started learning more and finding out more information, I began to understand why the government does certain things. So, I tried to paint a more balanced picture as to why the government does certain things, to let Singaporeans understand that perhaps, just perhaps, the government has its reasons. But as I, yet again, learnt more and looked at our government’s appalling treatment to its workers and people, by denying our rights and depressing our wages, then I realized that something is very, very wrong. The government keeps talking about its principles of governance – we should believe in meritocracy, we should have compassion towards one another. And yet, when they jailed workers who have been airing their grievances for months without recourse, and when they deny our voices, I began to realise how Our National Conversation is a just a sham to pretend that they are listening and they have no real want to listen or to figure out what they should do for us. They have it all figured – they will make as much money off us as they can, while they can. And time is running out for them.
For the longest time, PAP has also kept saying that the other countries will invade Singapore if PAP is no longer in government? Do you really think they actually will? Malaysia and Indonesia are major trading partners of Singapore. They have a lot of investments in Singapore. They rely on Singapore to thrive at this moment, so that they can thrive with Singapore. Do you think they would want to attack Singapore? Would you, in your right mind, launch an attack your bank, when all your money is inside and you are letting the bank earn interest for the money you’ve put inside? We live in a capitalistic world, whether it be good or bad – countries’ fate are too intertwined for them to want to do anything to cause another to fail, not when they are next to each other and rely on one another. And, let’s say, if one day, Singapore does indeed languish. Do you think Malaysia or Indonesia will want to attack Singapore? They wouldn’t be bothered to do so by then. Singapore has nothing worth fighting for. No resources, no land. Why would they waste they money fighting us to achieve nothing?
If the military isn’t created to protect us from external forces, what else is the military built for then? I’ll leave it up to your own conclusions. I only hope that if one day the government decides to use the military against its own people, that our men will have the smarts and honour not to turn the guns on our fellow Singaporeans.
New Year’s Day is coming in a few days. What’s your New Year’s Resolution going to be? For me, I’ve already started on a journey of speaking up, doing what’s right and sharing what I know. But I cannot do it alone. The many Singaporeans who are also doing it cannot do it just by ourselves. it’s time you do more than just reading and commenting on blogs and on social media platforms. Singaporeans, we need to come together, we need to be united. We need to be strong and come out with a plan together. Otherwise, we will continue to be run over and over again, not knowing what hit us, yet again, and again.
For 2013 onwards, what will you do? How will you speak out? How will you be involved? How will you take a stand? And how will you make what you know and believe in, known, so that together, we have a voice – one voice – and we will demand what is ours back to us. We have a right to be treated with respect. We have a right to speak out and demand for what is ours. We have a right to live in dignity.
What say you, Singaporeans? Will you rise and will you be heard and let our voices be known? The time is now. Our eyes are opened. YOUR EYES are opened. What will you do? Let’s do it.
I want Singapore to be a better place for ALL, and not just for a few. This is why I am writing this blog.