According to the Straits Times news report ”Singapore system remains fair and sustainable” (Mar 6) – “If you take the top 20 per cent of households, they pay 55 per cent of all taxes, when you add up income tax, property tax, GST, car taxes, maid levies, everything.

And they receive 12 per cent of the benefits. If you look next to the middle 20 per cent of households, they pay 11 per cent of all taxes and they receive 20 per cent of all benefits.

When I say middle 20 per cent, I mean those between the 40th and 60th percentile. And the lowest 20 per cent of households pay 9 per cent of all taxes, largely through the GST, but they receive 27 per cent of all benefits. This is a progressive system.”

Lowest ratio of social spending to revenues in the world

– Is it fair that whilst developed nations like the Nordic countries generally spend about a dollar on its citizens for every dollar of revenue – we are only spending about 60 cents?

“The system is not just about redistributing from the rich to the poor, it’s also about the middle income group. Very importantly, the middle-income group in Singapore are net beneficiaries of our system. And there’s been a very significant increase in the amount of benefits the middle-income group have got over the last 10 years. For every dollar of tax paid by the middle-income group, they now get a bit more than $1.70 back.

The benefits that our middle-income group get are not like what you see in the Scandinavian countries or the United Kingdom. Some of them have free health care, free tertiary education, but they are paying for it. And in most of these societies, with the Scandinavian countries being a classic example, in fact their tax systems are not particularly progressive. They rely mainly on the VAT (value-added tax) and high income tax for everyone to be able to flow back the benefits. Everyone is paying for the free benefits that they’re getting. And when you add it all up, the benefits they get from a dollar of tax they pay in the middle-income group is in fact less than ours.

We’re a low-tax regime. We try to keep the burden of taxes on the middle-income group low. We target our benefits in health care, in education, in every area for the low-income group and the middle-income group. Everyone co-pays for what they are getting, so we know that nothing is for free. We co-pay, we keep taxes low and the net benefits are ones which the middle-income group gains from..”

Highest ratio of “taxes” to “benefits” in the world?

– Is it fair that if you include all indirect and consumption taxes and CPF contributions (implicit tax) – from a cashflow perspective – we are the highest taxed citizens in the world who get the lowest relative benefits back?

“Our approach is about empowering people and aspirations, and rewarding responsibility throughout life. It’s about encouraging and empowering people to learn at every age, to work, to take second or third chances and to make meaningful contributions through our careers, whatever the job.”

The whole world comes as tourists to apply for jobs?

– Is it fair that we allow the whole world to come as tourists to apply for jobs to compete with Singaporeans, like no other country in the world?

“Helping people to own a home and, whether it’s breadwinners or homemakers, to raise the next generation”

Most expensive public housing in the world?

– Is it fair for the Government to make so much money by selling to us the most expensive public housing in the world – like no other country in the world?

“It’s also about developing a broader cultural responsibility in our society. It’s not just about everyone doing their part, rich or poor. It’s also about being able to count on each other, and those two things go together. We are able to count on each other now or in the future only if everyone plays their part, if everyone plays their responsible role. Our whole approach therefore has been to avoid a zero-sum game between personal and collective responsibility, and get a compact where personal and collective responsibility in fact reinforce each other”.

Everyone should “do their part”?

– Is it fair for the Government to not “do their part” by not spending a single cent on healthcare, CPF and HDB, from a cashflow perspective?

“And it’s certainly not just a matter of putting in more government resources. Our real task is to find ways to help people not just by providing them with more resources but helping them to rebuild family lives, making sure we’ve got empathetic teachers, mentors, community volunteers, and helping them to build circles of friends and peers around them, people with a positive and aspiring outlook on life. We must preserve our Singapore ethic of work, effort and responsibility and collective responsibility for the community. I think that sums it up”.

Highest cash Budget surpluses per capita in the world?

– Is it fair for huge cash Budget surpluses of over $20 billion to be made year after year?

“The strengths of the CPF

I go on now to the second important issue in sustainability, which is the CPF system and Silver Support. The CPF system is different from the main systems that we see abroad. We’ve tried to avoid the major disadvantages of these other systems while being able to take some of the advantages.

The CPF system is both individual and collective. It is first and foremost built on individuals’ savings and responsibility. But there’s a strong element of collective responsibility. The Government provides support through the Budget to lower-income members and provides assurance to all. And through CPF Life, we are pooling risks to support one another in the face of life’s uncertainties throughout retirement. It is progressive, like most of the collective pension schemes. But it is financially sustainable, unlike the collective pension schemes. It places no investment risk on the individual, unlike the defined contribution schemes of individual retirement accounts.

The reason the CPF system is both progressive and sustainable, which is a rarity, is because the transfers that take place in the CPF are from the government Budget, not transfers from one generation to the next”.

Only country that makes money from citizens’ pension scheme?

– Is it fair for us to be the only country in the world that mnakes so much money from the people’s pension scheme, by scheming off an estimated three per cent of the annual returns for decades already, resulting in the lowest real returns of all national pension schemes in the world?

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