by Wing Lee Cheong
In his 1996 National Day speech, Prime Minister Goh said, “People often want the government to assume the full burden of the cost of medical care and provide treatment free to Singaporeans. Because of the painful lessons learned in other countries we have not done this. All the countries which have done this—Britain, France, Germany, Canada, and Communist China—have failed. Their systems break down as people overuse so-called ‘free’ health care, which they actually pay for indirectly through higher taxes. Their health services deteriorate. Waste and inefficiency become endemic. Now these countries are forced to cut back on services, introduce cost controls, and reform the system.”
Singapore leaders have repeatedly spun the notion that Singaporeans pay one of the lowest tax in the world. It is a myth for in reality Singaporeans pay much higher taxes than other developed countries like Canada.
Consider a person making $6,000 a month in Singapore and a person making a similar amount in Canada. Let us say the person in Singapore pays zero tax and the person in Canada pays his maximum without any deduction of 29.7% tax. Assuming both have a working life of 40 years and a life span of 85 years.
The person in Singapore pays nothing since we assumed his tax to be zero.
The person in Canada would have to pay based on annual salary of $72,000 at 29.7% = $21,384. Based on a working period of 40 years the Canadian would have to pay a total of $855,360. It should be less if deductions are taken into consideration but we give the advantage to Singapore to minimize arguments. The Canadian tax does seem high to Singaporeans. However when all the cleverly hidden taxes are taken in consideration, Singaporeans are paying more in taxes but not getting the social benefits enjoy by Canadians:
List of Singapore hidden taxes that Canadians do not pay:
- COE - $60,000 every ten years assuming that a Singaporean changes his car every 10 years. In 40 years he needs to buy 4 COE = $240 ,000.
- Cost of car like Honda Civic - $75,000 in Singapore vs $25,000 in Canada. 4 cars in forty years at the difference of $50,000 = $200,000
- Road tax - $1,300 per year for 40 years = $52,000
- Higher petrol price - $100 extra a month for 40 years = $48,000.
- ERP - $100 extra a month for 40 years = $48,000.
- Maid levy - $300 per month for 20 years (assuming a family only has the maid for 20 years instead of 40 years or more) = $72,000.
- General medical bills for 85 years at $1,000 a year = $85,000. (less than $100 a month)
- Cost of housing, the difference between a similar house in Singapore vs Canada is $300,000 to as high as $1 million and more. We shall take the lower end of the difference = $300,000.
- The water/gas/electricity bills are only one-third of Singapore’s making a savings of at least $102,000 based on a saving of $100 per month x 85 years.
The total savings for a Canadian is at least $1,147,000 or more depending on how many cars, maids and children he has. This amount is more than adequate to offset the Canadian tax of $855,360 at 29.7%.
In addition the following is a list of social benefits that Singaporeans do not enjoy:
- “Milk money” of $250 each child receive a month from the government from the day the child was born until age of 18 years - $250 x12 x 18 years = $54,000 for one kid. Two kids = $108,000.
- Old age pension plus assisted income for retirees without any income, a retiree gets $1,250 or more a month until death. Assuming the retiree lives for 20 years = $300,000. A couple could get a combined retirement income of $2,500 a month even though they may not have been working. The total receivable for 20 years would be $600,000.
- Retirees travel for free on all public transportation with limited black out time on weekends, i.e. trains, buses, ferries. Some of the ferry rides cost more than $100 per trip. Assuming a retiree saves $150 a month for transportation - 20 years of retirement = $150 x 12 x 20 = $36,000.
- Retirees can study in universities for a token fee of less than $100 per year.
- Unemployment insurance which a citizen can claim when he/she is out of a job. It is common for a person to be out of job for 6 months in his 40 years of working life - $36,000.
- Free treatment of severe illness like cancel, liver or kidney failures - $200,000 or more.
Depending on the choice of lifestyles and individual health conditions, the Canadian tax system has an advantage of between $500,000 to over $1 million when compared with the Singapore tax system even though Singapore official tax rate is very low.
To illustrate the difference, let me provide the following analogy:
Two shops selling char kuay teow :
The Sinkee shop selling a plate for $2.00
The Candee shop selling a plate for $10.00
At a glance, shop Sinkee is a bargain at only $2.00 a plate. However when you order a plate, you get only a plate of char kuay teow and nothing else. If you want “hum” it is an extra $2. If you want chilly, it is another $1. If you want chop sticks, it is another $1, etc. Soon your plate of $2 char kuay teow with all the extras will cost you $15 or more.
On the other hand, at Shop Candee, the $10 a plate has all the extras included in the price and taste much better. The service and environment is also much better than the cocky service of Shop Sinkee.
In Canada, the service providers will try their best to guide and give you as much as possible. In Singapore, it is the opposite, the service providers will try their best to give you as little as possible. It is typical "kaisu" Singapore culture.
The moral of the story is that we should not be fooled by statistics and world rankings. Singapore is ranked third place by IMF in their 2010 report with a per capita of $57,238 vs Canada at eleventh place with a per capita of $39,033. Do Singaporeans really feel richer than Canadians when most Singaporeans have constant anxiety over inadequate savings for retirement, medical bills, being homeless, etc.
Most Canadians enjoy their retirement with a peace of mind whereas most Singaporeans dread retirement with doubts whether their CPF is sufficient to see them through or even if they live long enough to touch any of the CPF money.
The writer is currently living in Vancouver. He has given up his Singapore citizenship and is now a happy Candian retiree.
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