Singapore needs to address tax practices, public social spending and labor laws after being ranked 149th for efforts to reduce inequality 

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Developmental charity Oxfam and non-profit research group Development Finance International (DFI) put together a report on the efforts of 157 countries in terms of fighting inequality. Singapore scored one of the lowest, placing 149th in the ranking, because of “harmful tax practices”, low “public social spending” and insubstantial labor and gender laws, as cited by the study.

The Commitment to Reducing Inequality (CRI) Index, ranked the governments of 157 countries based on their efforts to bridge the growing inequality gap in three key policy areas – social spending on public services such as education and health, progressive taxation and labor rights.

Oxfam added further indicators under the tax and labor areas, covering harmful tax practices as well as minimum wage and women’s labor rights.

Oxfam’s decision to introduce the harmful tax practices indicator is to address concerns that last year’s index did not consider the extent to which a country enables companies to avoid taxes. As a result, certain countries known to be tax havens such as Luxembourg and the Netherlands received higher scores.

As to the new indicator on women’s labor rights, Oxfam cited the reason that “working women can sometimes experience greater levels of domestic violence in response to greater economic autonomy”.

Singapore’s ranking – 149 out of 157 countries – is below Bangladesh and just above Laos.

It dropped 63 spots from placing 86th last year, when Oxfam, a United Kingdom-based charity organization dedicated to improving poverty, first published the index.

Denmark tops this year’s list, followed by Germany and Finland, with Japan (ranked 11th) being the only Asian country placing in the top 15.

At the bottom of the list are Nigeria, Uzbekistan and Haiti.

According to the report, Singapore’s “harmful tax practices” are what placed it in 149th place. Though Singapore raised personal income taxes for the rich by 2 percent in 2016, the maximum personal income tax rate for the nation remains very low for the highest earners at 22 percent.

Oxfam also said that Singapore and Cayman Islands are places where corporations and individuals are can indulge in “tax dodging” by having very low tax rates or providing tax havens for evasion, while others like Switzerland encourage their actions by agreeing to widespread tax exemptions and “sweetheart” deals.

According to Oxfam, avoidance and evasion of taxes by corporates and individuals “are costing developing and developed countries alike hundreds of billions of dollars a year”.

“Virtually all of this tax avoidance and evasion is undertaken by the wealthiest in society, making the tax system much less progressive,” it added.

Besides being rated poorly due to its taxation practices, Singapore was also cited for its “relatively low level of public social spending”.

Singapore’s budget allots 39 percent towards education, health and social protection, which Oxfam noted is “way behind” other Asian countries like South Korea and Thailand, where 50 percent of the budgets is set aside for those same areas.

Singapore fought back when Oxfam said that the city-state decreased its spending on education even while other countries were ramping up their education budgets, referring to its 2018 Budget Report, which shows Singapore’s education expenditure having risen in the last two years.

Singapore’s actual expenditure for education in 2016 was about S$12.4 billion, while the revised expenditure figure for 2017 went up to around S$12.6 billion. The estimated expenditure for FY2018 goes up even more to about S$12.8 billion.

Singapore was found lacking in one more area – labor and gender laws.

“On labor, it has no equal pay or non-discrimination laws for women; its laws on both rape and sexual harassment are inadequate; and there is no minimum wage, except for cleaners and security guards,” the report said.

Singapore, which has been dealing with a worrying class divide, needs to address its areas for improvement in the fight against inequality, as pointed out by the study.