Another bumper year for Taxman, and Singaporeans cry

Atobe SG

Extracted from the Straits Times, Monday, 14 August 2006 - Page H19 - Money section:

Taxman pulls in record $10b for first half

Govt coffers set to fill up with expected collection of around $20b for full year

{size=small)By Narendra Aggarwal - Economics Correspondent[/size]

THANKS to strong economic growth, the taxman raked in a record $10.4 billion in the first half of the year.

The Inland Revenue Authority of Singapore (Iras) is now expected to pull in $20 billion for the full year - in what would be another record.

And all this means the Government looks set to be in a very strong position when the next Budget comes around.

Income tax from both individuals and companies, goods and services tax (GST), property tax and stamp duty collections all posted strong double-digit growth.

Strong economic growth meant fatter pay packets, which in turn meant more income tax. Also, people with more money in their pockets spent more, so that boosted GST and other revenue.

The jump in overall tax revenue was a handsome 15.8 per cent or $1.42 billion over the first half of last year.

This came as last year's robust 6.4 per cent economic expansion spill over into this year's tax revenues - and the red-hot 9.4 per cent economic growth in the first half of this year spurred things on even faster, say economists.

And as this surge in tax revenue is projected to continue, with the amount collected by Iras set to exceed $20 billion for this year.

Economists note that the 15.8 per cent surge in the taxman's collection in the first half is more than double the 6.8 per cent increase last year over 2004's collections.

And the $1.42 billion increase in money collected as taxes in first half of this year exceeds even the $1.25 billion rise posted for all of last year over the previous year.

Looked at another way, Iras' projected $20 billion revenue this year will mean a near doubling of its collections over the past 13 years. Last year's total amounted to $19.2 billion.

Iras is the state's most important money collection agency as it contributes 65 cents of every dollar that goes into the Treasury as government operating revenue every year.

As usual, income tax was the big money spinner, with collections shooting up by $650 million from a year earlier to hit $5.79 billion.

Rising incomes are in fact a double bonanza for the taxman as people with more money in their pockets tend to spend more.

As a result of the feel-good-economic factor, GST collections shot up nearly 25 per cent in the first half, adding a cool $400 million.

This took GST revenue past the $2 billion mark at half-time.

The conomic buoyancy also resulted in a spurt in property and stock market activity, bringing further cheer to the taxman.

Stamp duty collections shot up 63 per cent, bringing in an additional $233 million to Revenue House, the Iras headquarters.

Property tax collections rose 12.6 per cent, moving past the $1 billion mark at half-time for the first time.

Duties on private lotteries rose 5 per cent, while betting duties fell 3 per cent.

Even the dead did their bit for the nation in their final act. Estate duty, though a small contributor overall, rose 50 per cent.

Estate duty, payable on the assets left behind by the dead, is currently being reviewed by the Ministry of Finance. Its updated structure is due to be unveiled in the Budget next year.

Income Tax
Jan-June 2005 : $5,139 million
Jan-June 2006 : $5,791 million
Percentage Change: +12.7%

GST
Jan-June 2005 : $1,647 million
Jan-June 2006 : $2,053 million
Percentage Change: +24.6%

Property Tax
Jan-June 2005 : $1,000 million
Jan-June 2006 : $1,125 million
Percentage Change: +12.6%

Betting Duties
Jan-June 2005 : $656 million
Jan-June 2006 : $635 million
Percentage Change: - 3.1%

Stamp Duty
Jan-June 2005 : $368 million
Jan-June 2006 : $601 million
Percentage Change: +63.3%

Private Lottery Duties
Jan-June 2005 : $136 million
Jan-June 2006 : $143 million
Percentage Change: +5.1%

Estate Duty
Jan-June 2005 : $35 million
Jan-June 2006 : $52 million
Percentage Change: +49.7%

The year on year results shows continuous growth, if we compare the estimate for FY-2006 to that of FY-2004 : Financial Year 2004, with the Singapore Tax Revenue estimated at $17.55 billion.

If every modification to imposed tax can produce a positive effect to the economy, why will the Government not review the Stamp Duty and Estate Duty so as to make life a little easier for Singaporeans ?

With so much revenue sucked up from Singaporeans, is it any wonder that Singaporeans have little left for old age, and have to consider retiring with the left over CPF monies to Old Fold's home established in lower costs neighboring countries

ShutterBug SG

Hi Atobe,

Notice how nobody is contributing to this thread of yours?

Because I think when faced with hard cold facts like yours, those zombies don't know what to say!

Kenashi SG

Originally posted by Atobe:
[b]Extracted from the Straits Times, Monday, 14 August 2006 - Page H19 - Money section:

[color=darkred]The year on year results shows continuous growth, if we compare the estimate for FY-2006 to that of FY-2004 : Financial Year 2004, with the Singapore Tax Revenue estimated at $17.55 billion.

If every modification to imposed tax can produce a positive effect to the economy, why will the Government not review the Stamp Duty and Estate Duty so as to make life a little easier for Singaporeans ?

With so much revenue sucked up from Singaporeans, is it any wonder that Singaporeans have little left for old age, and have to consider retiring with the left over CPF monies to Old Fold's home established in lower costs neighboring countries

[/b]

Most of the money are sucked from the rich n companies lah
most singaporeans only pay GST lah
Mr. Green

BillyBong SG

The people concerned do not see it as an issue to ease the burden of the average singaporeans, who will spend the first 10-15 years of their married life in financial debt, slobbing day and night to pay their bills and morgage loans. The rest of their life will be spent in a futile attempt to address their retirement kitty.

I have no issue regarding the current Income tax formula but i think property prices, especially for HDB can be significantly deflated to reduce the burden of cost for residents. Transport, fuel and electricity prices are already rising rapidly, it looks like the govt is trying to create some form of controlled inflation in Singapore.

The gap between the high income and lower income group continues to widen, with no end in sight. Vagrants are beginning to fill the streets and void decks and there aren't enough govt homes to house them.

If our govt continues to pat themselves on a job well done, Singapore will soon go to the foreigners and expats, and we might become the endangered species.

dakkon_blackblade SG

Actually it’s not a problem if tax revenues are high. It’s what the government gives back to the people using those tax revenues which is important. So instead of just looking at where the tax revenues come from, we should look more at where they go.

Atobe SG

Thanks for your contribution, the lack of response was probably due to the sudden upsurge of new threads that had appeared, and pushed this thread down to the bottom of the pile.

In any case, this thread could have been placed into Oxford Mushroom's posting on : "Would you pay more to support local businesses/industries? "; but then again, it could also have been a new area of interests concerning the huge accumulation of revenue, while the majority of Singaporeans are struggling to pay their monthly bills; as well as to save for old age and medical care.

Hence, I decided to place it as a separate thread, and provide a link to this from Oxford's thread.

Atobe SG

Double post

Atobe SG

When Tax Revenues becomes out of proportion to the needs of the Government, and lead to "run-away" surplusses every year, it can only mean that the money is being sucked away from "other areas".

This "other areas" are the pockets of Singaporean Individuals, small and medium businesses, and corporations.

While businesses can see some direct return of the tax paid - in the form of research grants, export assistance programs, subsidies for training, tax holidays - there is no such assistance to the Singaporean individuals, except for the $100 to $1500 annual handouts.

Such annual handouts are taken back from the individuals when they utilise or consume any of the high-priced Government or GLC services.

Whatever amount that the Government spend with the revenues, will always result in the funds finding its way back to its Treasury by way of charges and fees imposed.

Is there a need for such repeated annual surplus that continuously boost our National Reserves, while Singaporean struggle to meet daily and monthly bills, and struggle to boost their personal savings for old age and medical expenses ?

Even expatriates are finding Singapore costly despite their supposedly better remuneration package, and have to resort to a variety of creative new ways to meet with their costly circumstances.

What about Singaporeans in the lower middle income, and lower-lower income groups - with less resources and knowledge ? How do they cope ?

The repeated stories of abandoned old folks, who languish alone in their old age is the sad evidence of the struggles that the less fortunate Singapore families are actually facing to make ends meet.

Abandoning their love ones was a difficult option, or voluntarily leaving the family - so as not to be a burden - is the only choice left.

What has the Government done to alleviate this known social problem in Singapore that has been existing since Singapore's independence ?

The Government response has been largely hands-off, only giving on the basis of a "dollar-for-dollar" support to any charity raised from the public.

Unfortunately, for every dollar accumulated from charity, going by the exposed NKF computation, 40 cents from every dollar is spent on the cost of raising the charity.

In actual fact this cost of 40 cents is even higher, if we see that the other half of the accumulated charity was cost-free as it was a direct contribution from the government "dollar-for-dollar" funding.

The amount that actually serves the charity is far less then the total contributed by Singaporeans and the Government, as costs becomes a serious factor when based on high cost infrastructure caused by indirect Government imposed costs - and the vicious cycle continues, with the Government being the main beneficiary.

With such huge tax surplus, the Government should have a direct responsibility of meeting its obligations to Singaporeans, especially in providing more attention to medical costs and quality of life during old age.

Unfortunately, the Government has declined this responsibility.

Although Singaporeans pay lower Income Tax than Sweden, the actual amount collected by the Singapore Government is far larger than the Swedish Government - considering that Sweden has a larger population of NINE MILLION and an advanced economy.

For Year 2005, Sweden Budget Report reflected a total Tax Revenue of SEK15 Billion - at an exchange rate of SEK 1.00 to S$0.35 - this amount to S$5.25 Billion.

In Year 2005, (see opening post), Singapore had collected S$6.786 Billion only from Income Tax and GST collections.

Yet, Sweden provides for her Swedish Citizen from cradle to grave.

Are we asking for such similar treatment ?

Hardly, we are asking for the Government to be less greedy - in sucking every cent from the pockets of Singaporeans - (when we cannot even afford to have wallets).

As far as is known, any unused surplus will be transferred to the GIC, who will disburse it to Temasek Holdings, and both will merrily invest in all local and overseas projects that sucks up our funds; and with returns that boost the National Reserves further - and paying themselves the Million Dollar Annual Ministerial Salaries, while Singaporeans are left with the "crumbs from the table".

dragg SG

where did it go?

Kenashi SG

nation building
build up the pocket of ministers Laughing

Atobe SG

With a Tax Collection System that is slowly moving towards Consumption Tax - in the form of the GST, as it matures with an ever ballooning annual collection, Income Tax should be reduced to an insignificant amount.

Essentially, the government should be looking into lowering the Basic Costs that Directly or IN-directly affect the quality of Life for Singaporean - at present and towards old age.

With each passing year, ever larger annual surplus is boastfully reported by the POWER OF ONE - to reflect its supposed efficiency in management - which largely gloss over the hardship of Singaporeans in meeting daily and monthly expenses.

Is there any reason for the Government to maintain Stamp Duties - especially when applied on land sales contracts that reflect artificially inflated high prices imposed by the Government ?

The collection from Stamp Duties get even larger when each and every official transactions with the Government and between private parties has to be executed with a Stamp Mark calculated as a percentage of the contract value ?

Is there any reason for the imposing Estate Duties, when such assets are accumulated from the hardwork of Singaporeans, and which should pass on to the surviving members of the Family ?

The Estate Duty is an archaic form of neutralising any political threats from the acumulated generational wealth held in the hands of Private Individuals or Families - who are beyond the ambit of Government influence and control.

Estate Duty has resulted in the disappearance of some well known wealthy Singaporean Families - such as Lee Kong Chian - from Lee Rubber, Lee Foundation, Cathay Holdings; Aw Boon Par - Haw Par; Shaw Brothers.

These names reflect the pioneers of famous Singaporean, who build up their wealth through hard work and shrewd economic foresigh; they build up their wealth without forgetting their social responsibility towards Singaporeans.

With their demise, we see a new breed of Political Families emerging through a tight grip on political power.

What does this portend for Singapore's Future ?

Can there be any incentive for private enterprise ?

Atobe SG

Why should Estate Duties be imposed on the hard earned assets of Singaporeans ?

If the Singapore Government encourages Singaporeans to be entrepreneurial in Life, and provide all kinds of incentives to excel and achieve wealth in cash and assets; why should the same Singapore Government seized a portion of the accumulated wealth after Death of the Singaporean Entrepreneur ?

Is there no let up from the Ruling Party to continuously take from Singaporeans from "cradle to grave" ?

Extract from the IRAS website on the topic of Estate Duty :-

For cases where the deceased died domiciled in Singapore

Estate Duty is payable on the aggregate market value of all Singapore assets (both immovable and moveable) and movable assets outside Singapore of a deceased person at the date of death. His land and buildings (immovable property) outside Singapore are not liable to duty.

Moveable assets include deceaseds cash, bank accounts, insurance monies, shares, CPF balance, motor vehicles, credit balance with Comptroller of Income Tax etc.

Under the Estate Duty Act, the following gifts made by the deceased during his lifetime are liable to estate duty:

A gift made five years before his death
A gift, whenever made, is liable to estate duty if the donee (person to whom the gift was made) did not possess and enjoy the gift immediately to the entire exclusion of the donor
A gift for public or charitable purposes made twelve months before his death

Exceptions:

The following gifts made by the deceased during his lifetime are not subject to estate duty on his death:

A gift made on or after 1st January 1999 to the Singapore Government or Institution of Public Character (IPC)

A gift of money or other gift (approved by the Minister) made on or after 1st April 1987 to an approved Museum

For cases where the deceased died domiciled outside Singapore

For a deceased person dying before 1 January 2002, estate duty is payable on the aggregate market value of all his Singapore assets, immovable and movable as at the date of death.

For a deceased person dying on or after 1 January 2002, no estate duty is payable on his movable property in Singapore. Only his immovable property in Singapore is liable to estate duty.

Atobe SG

If you wish to protect your hard earned movable and non-moveable assets that have been accumulated during your lifetime, work here and live outside of Singapore.

An extract from 'Wills Online'

Estate Duty Calculation

When a person dies, all his assets form his estate, and tax is payable ( "estate duty" ) if the total sum exceed certain value.

Estate Duty is payable on the aggregate value of all Singapore property (movable and immovable) and movable property outside Singapore. For land and houses outside Singapore, estate duty is not payable to the Singapore Government. Whether there is any other form of tax by the government of the country in which the land or house is located depends on the previaling law in that country.

Most Singaporeans however do not need to pay estate duty. as there are exemptions for residential properties not in excess of 9 million Singapore Dollars, and for other movable assets not in excess of S$600,000/- including monies in the Central Provident Fund account.

Deceased died domiciled outside Singapore

Estate duty is payable on the aggregate market value of all a person's Singapore property, immovable and movable as at the date of death for a deceased person dying before 1 January 2002.

Estate duty is not payable on the movable property and only on his immovable property as at the date of death for a deceased person dying after 1 January 2002.

Estate duty exemption (For a person dying on or after 28 February 1996)

Dwelling house up to the value of S$9 million

All other properties (including CPF) up to the value of S$600,000

Interest on estate duty.

If estate duty is payable and not paid, there is interest payable to the tax department.

TooFree SG

Im afraid the Estate Duty can be an effective stopgap economic measure to narrow the rich-poor wealth divide which has been fearfully drifting further apart in recent years. Though within the meritocracy framework, society must always progress as one nation, one people. It can get pretty nasty if the gap continue to widen with the outcome a likelihood of social unrest.

It is perhaps more critical to examine on whether the Estate Duty can at least suppress for a certain period of time the inevitable rise in other consumers' taxes in time to come which greatly affect the majority more than the Estate Duty on the handful filthy rich. Called it legally robbing the rich to aid the poor but if the well-to-do are not contributing more in the monetary aspect to enhance the society well-being and equality, then their selfishness can result in fatality mass discontentment.

Neutral

dragg SG

just look at the total amount of the lottery and betting duties!!!

now we know why the casino is a must.

Surprised

Atobe SG

Has it not been the Government's plan - not to create dis-incentive to those who are industrious, and has designed programs to reward those in the upper income bracket for their productivity and contribution to Singapore's wealth creation.

Having rewarded them in Life, why take it away on Death - through Estate Duties ?

With the majority of Singaporeans being Middle Income, the Estate Duties will have a larger harvest from the larger pool of Middle Income Singaporeans.

If Estate Duties will narrow the gap between the Rich and the Poor, it will make paupers out of the not-so-Rich Middle Income Singaporeans.

Will Singaporeans ever see the light at the end of a long tunnel created by the POWER OF ONE, in which each generation will be enslaved to perpetuate the Singapore System designed to create wealth to be accumulated only by the POWER OF ONE ?

TooFree SG

I certainly do not see that the govenment meant to discredit the talented and enterprising individuals to accumulate wealth but a mutual understanding that outstanding individuals who had accumulated surpluses of wealth should contribute more to the community. The government can provide ample opportunities, programs and funds to aid promising individuals to excel in life but the common consensus is that the particular individual does not milk the system for sole benefit but to contribute a small part in return to the society upon death.

How about self-made millionaire?

One can note that.
'A young tree cannot grow on its own even if it does has strong will. The sunlight provides warmth, air for photosynthesies, fertile soil for nourishment, water to sustain life. It is a combination of variable factors that nurture the growth of a young tree into a strong tree.'

No government at the end of the day, is able to conduct proper works with a fiscal deficit. The Estate Duty system cannot be flaw when the majority do not feel the pinch other than the richer counterpart. However, I have to agree on the growth of affluent middle-income Singaporeans in recent years, and perhaps it is time to review on rising the bracket of the Estate Duty rather than complete abolishment of it at the present day.

Neutral

Atobe SG

You are right in that the Government do not - "discredit the talented and enterprising individuals to accumulate wealth but a mutual understanding that outstanding individuals who had accumulated surpluses of wealth should contribute more to the community".

Yes, the Government does fund and help grow new enterprising efforts from small and medium businesses; and even provide tax incentives for the upper income groups - as well as average Singaporeans - to excel and achieve even higher levels of income and wealth accumulation.

Yes, a young tree cannot by itself grow bigger even if it has the will to do so, and as much as "guiding hands" provide clearing of the upper vegetation layers to allow sunlight, air and water to nurture the young sappling, the young tree has also return with gratitude the help from the guiding hands by contributing to the general environment with its own photosynthesis work. Even as it grow through its various stages of youth and adulthood, [i][/b]the young tree continue to contribute throughout its life span[/b].

The question is - after the tree has reached its maximum Life, and have contributed more then its fair share to the environment that nurtured it and help it to survive into old age - what will become of its accumulated wealth ?

Should it not be transferred to the surviving members of its own family, or should the "social goal of narrowing Rich-Poor gap rob the family of the years of the wealth accumulated by its patriach ?

No one is speaking about zero sum for the Government, as any smart Government do not depend on one single source for revenue - and Estate Duties is but only one out of the array of direct and indirect revenue collection methods.

The question is the morality of the Estate Duty that will take away the bulk of the accumulated wealth from any hardworking Singaporean, who had diligently worked for the sake of his family; is he only to see the bulk of his hard earned wealth being taken by the State on his passing ?

It becomes more immoral when the State is already sucking up as much from all Singaporeans through an array of direct and indirect taxes, as well as by the participation of the State in providing a blanket of every essential services to Singaporeans at a profit levels that are dictated and sanctioned by the State.

It becomes immoral when the State makes runaway surplusses annually, and the leaders made millionaires, while the majority of lower middle income Singaporeans cannot even afford to make ends meet, let alone being able to survive during Old Age; and the small accumulated wealth of hardworking upper middle income Singaporeans will be threatened by the Estate Duty that leaves crumbs to the surviving family members.

PM LHL has hinted of a review to the Estate Duty, but will it go far enough to preserve private wealth accumulated through individual enterprise and efforts; or will the State continue with its paranoia of private wealth being able to fund the political activities from the Alternative Parties ?