S'pore's tax burden 'lighter than those of most developed countries'
SINGAPORE has a "lean Government" which imposes a much lighter tax burden on the economy compared with those of most other developed countries, Temasek Holdings chief executive Ho Ching said in a Facebook post about Singapore's government budget yesterday morning.
On average, the governments of most developed economies collect more than 30 per cent of their gross domestic product (GDP) in taxes, said Ms Ho.
Scandinavian countries like Denmark have high tax burdens of almost 50 per cent, and even Norway - with its sovereign wealth fund from oil and gas - has a tax burden of over 40 per cent, she noted.
Taxpayers in the United States do not have just a federal tax burden, but also state and municipal taxes. US government expenditure is over 40 per cent of the country's GDP. Hong Kong, which does not spend any money on defence, has government expenditures of over 18 per cent of GDP.
In comparison, the Singapore Government collects about 15 per cent of the country's GDP in taxes.
This percentage was higher - at about 20 per cent - before 2000, but has fallen since because the economy grew faster than government revenues and expenditures over the past 15 years, said Ms Ho.
"Looks like (the Singapore Government) is a pretty lean government with a much lighter tax burden than most other developed economies, no?" she wrote.
Ms Ho, who had earlier put up a Facebook post about the management of Singapore's reserves, noted that government budget surpluses go into the reserves.
The Government ran a budget surplus of about 3 per cent from 1997 to 1999, "as there were small amounts of special transfers and top-ups for those years". The surplus fell to about zero to 1 per cent from 2000 to last year.
Singapore is likely to see smaller surpluses in future, given rising government expenditures and its competitive tax structure, Ms Ho said. This means reserves will also be accumulated at a slower rate.
"If we don't want to see higher tax burdens, we should not be careless or wasteful in our spending. (This is) as important for government as for all of us as a people."