It is shocking but true: middle-income earners will have to pay more taxes should the government choose to move towards a more progressive tax scheme. And it is a matter of time before this becomes a reality.
Given the current asset-rich, cash-poor situation in Singapore, coupled with a widening income gap, ageing population and increased social spending, the government announced in this year’s budget that, apart from raising property tax rates for high-end properties, it is looking to enhance its current tax scheme.
The enhanced tax scheme will not only ensure that the country’s Gini coefficient, a widely-used barometer of income inequality, will decrease or at least stabilise and in turn, prevent Singapore from getting into debt. Otherwise future generations will have to foot the bill for current debts.
Nothing in life is certain but death and taxes. According to The Straits Times report on Wednesday, 20 November, 2013, the idea of having a more progressive tax scheme is to “be fair to all” without penalising “higher-end taxpayers excessively”. But what it really means is raising the taxes on the middle class.
While it is necessary to implement measures to help the poor and needy, however, having an enhanced tax system may, and overtime, burden the city’s middle-income earners and entrepreneurs as these groups are expected to contribute more.
Here’s a likely scenario: an increasing number of middle-income earners will find it even harder to make ends meet – let alone save for the rainy days, while entrepreneurial Singaporeans are either forced to give up their ambitions and take up a full-time job, or take their money and flee Singapore. All because of this punitive tax system. In return, Singapore has to rely on foreign corporations to create jobs that may not be sustainable or recession-proof for its people.
The one question I really want to ask is: Is this what we really want for our future generations?
What needs to be done is to lower the current cost of living, which is already high for a country that is comparable to the size of…Venice. Isn’t it time for the State to stop increasing our transport fares, food prices and Goods and Services Tax until everyone’s monthly income, including that of the low-income earners, is proportionate to the cost of living.
Another solution – as proposed by United Overseas Bank economist Francis Tan: get the super rich to pay more by reducing the taxable income for the highest tax bracket of 20 percent from the current $320,000 to $250,000. But this might be tricky as it may “reduce the attractiveness and competitiveness of Singapore as a place to work, play and live,” observes Tan.
Wait, isn’t Singapore already an attractive and highly competitive country to live and work in? Sans play. People here work an average of 52-hours a week and some individuals are complaining that they are not earning enough, despite taking home between $4,500 and $7,000 a month after CPF deduction. It’s no wonder Singaporeans are labelled as “money-minded” and “slave-drivers”.
Let’s not make living in Singapore extremely challenging for everyone until more people – both Singaporeans and foreigners – start leaving the Little Red Dot for greener pastures elsewhere so they can stop to catch a breath.