PAP GOVT PRETENDS TO BE LOW TAX WHEN INFACT WE PAY HIGH TAXES THROUGH CPF

What happened to FPAP and all those the-sun-shines-out-of-the PAP-ass fanboys and fangals. Andrew Loh just shown his quadruple bypass medical bill in which the govie picked up 63% of the tab. How come no gloating? No “See! Got Swiss standard, even better no need pay 40-50% tax some more”

In all seriousness, that 63% grant from the government is real enough. Those who are in the lower income strata will have a bigger grant. But is it really correct to think we pay nothing for the grant while the Swiss and other Europeans pay high taxes for their government to pick up an average 80% of the bill (not 63% okay but let’s not quible becos those right at the bottom might get close to this figure).

Well remember the large employer and employee contribution to your CPF. Good – then consider 2 things. The more important one is how much of your CPF is drained away by market based pricing of your HDB flat and the huge run-up in private real estate prices, both a courtesy of the government control of the land bank and its macro-economic policy choices. The revenues the government derived from the landbank go into the reserves from which the earnings are extracted under the constitutional spending rule, to be used for government expenditures such as healthcare grants like the one Andrew received. The other is the difference between the rate of return achieved by GIC investing in proceeds from debts owed to CPF and the actual interest paid to CPF accounts. This provide the same effect on the reserves albeit on a smaller scale.

The Europeans may have paid 40-50% tax for social benefits of which government share of healthcare cost is one of them. But we, too have paid for that 63% government share in healthcare through the medium of CPF returns and real estate prices. The clever trick is that this way of financing government healthcare costs is not called taxes.

That is why Tharman can wax lyrically how Singaporeans are so much better off than the Europeans because we get more back from the government than taxes paid. Of course, Tharman being Tharman did not mention CPF and the effects of home prices and rates of returns. This is all the more reason that our CPF contributions must be seen as tax or at least tax-like.

The PAP has no magic bullet when it comes to financing government expenditures like healthcare, Their magic is to obsfuscate the extraction of revenues to maintain the figleaf of being low-tax. This worked so well that a typical reaction of Singaporeans to increased social benefits or that Europeans enjoy a wide range of social entitlements is “do you want to pay high taxes”.

No, we already pay high taxes, it is just that they are not called taxes, which is the reason why I prefer the term transfers from individual to state to describe everything we paid to the government and benefits such grants and CPF withdrawal as transfers from state to individual.

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