E-POLL ON BUDGET 2008 (INDIVIDUALS)
"Two of the key thrusts of Budget 2008 are to continue to build a resilient community through strengthening financial security for retirement and helping the less well-off members in our society, and to provide a full range of education and training opportunities for Singaporeans.
Which of the following measures announced by the Finance Minister are you most satisfied with? * (Respondent can choose more than 1 from each category)
Tax Changes
- One-off 20 per cent personal income tax rebate capped at $2,000
- Removal of estate duty with effect from 16 February 2008
- Reduction in duty rates for liquor and wine"
Yes, I'm sure the less well-off members in our society appreciate cheaper alcohol to numb the pain of their lives.
Also, I always thought that the raison d'etre of estate duties was to stop the rich inheriting their wealth. (For objections, see: THE ESTATE TAX: MYTHS AND REALITIES)
I was told (albeit by the PSC microchip) that only 30% (?) of Singaporeans pay income tax due to a high income threshold and exemptions, but looking at the How to calculate your tax spreadsheet, I'm not sure if that is the case.
Your first $20,000 of annual income is tax free, which works out to $1,667 a month; the average monthly household income in employed households in 2007 was $6,830, which works out to $3,415 for 2 earners and $2,277 for 3. Furthermore, you have to add in Net Annual Value of property (though there's a $150,000 exemption). Unfortunately I'm not familiar with the wild and wonderful world of property in Singapore, but given that a 4 room flat in Tampines is valued at $278,000, and smaller flats are in older and more centrally-located locales (since they only just started making 3-rooms again), maybe only new 3-rooms are that cheap (Caveat: the market now is hot, so this analysis may not apply every year).
[Addendum: I got this bit wrong.
The site says: "NAV is the annual value (as shown in your property tax bill) less allowable expenses. Annual value is the gross amount at which the property can be expected to be rented from year to year."
So actually most people don't pay tax on the NAV of their property.]
There are some forms of relief, but even those which apply to many people, like NSman (self/wife/parent) relief ($1,500-$3,000), Earned income relief ($1,000) and Qualifying/handicapped child relief ($2,000) would seem to make a difference only if you have more than one child.
I am thus extremely skeptical of the claim that only 30% (?) of Singaporeans pay income tax (and am slightly skeptical of the lesser claim that less than half do). Unfortunately, those who would be able to conclusively answer this question are unable to do so.
[Addendum: Given how complicated the tax code is, I wouldn't be surprised if most people made a mistake here and there. We could all be guilty of tax evasion - it's just whether they choose to chase us for it. Gee.
The PSC microchip sent me this URL:
Channelnewsasia.com | SINGAPORE BUDGET 2001
"ROUND UP SPEECH DELIVERED BY MINISTER FOR FINANCE FOR THE DEBATE ON THE
FINANCIAL YEAR 2001 BUDGET
7 MARCH 2001
Mr Low... also conveniently forgets that nearly 70 percent of economically active persons in Singapore no longer pay any personal income tax"
Perhaps this no longer holds true 7 years later.]
Other interesting nuggets about tax relief:
- Grandparent caregiver relief is to "help working mothers take care of their children. Single or male taxpayers are not eligible for this relief." (emphases in original)
- Parent/handicapped parent relief "is a relief to promote filial piety".
- "'Wife relief' is a relief to support family formation, and to provide recognition to male taxpayers supporting their wives." (though on the upside, handicapped husbands qualify you for relief)