TR EMERITUS

The government likes to say Singaporeans enjoy very low tax rates compared to other nationals. But, is it true? A FB friend compared the taxes that citizens from Singapore and Finland pay in their respective countries. (See Daniel Yap’s post below) The gist is that while the majority of Singaporeans pay very low income tax, they have to pay for their own retirement, medical expenses, education for their children and conservancy, in whole or in part, which in Finland are provided by the state and as such, are free or almost free, although their tax rate is much higher. In other words, Singaporeans pay directly out of their pocket for benefits which the Finns pay indirectly via a higher tax rate. It is difficult to compare the two systems as they are different but that is the gist. In addition, the Finns also enjoy unemployment benefits which Singaporeans do not. The Finnish system is also more progressive, underpinned by a whopping 35% capital gains tax which taxes the rich more, while Singapore has no such tax. It is not my purpose here to compare who pays more taxes, but to examine the values that underpin the two systems. In Singapore, you contribute to your own retirement fund (CPF). If you earn more, you will have more money for retirement. You do not contribute one cent to the CPF of the lady who is cleaning your office. If she earns little during her working life and does not have enough for retirement, it is her own doing. She also has to pay for her own medical expenses, her children’s education and conservancy, although there are subsidies, which increases if she earns less. In Finland, those who earn more, pay more taxes than those earn less. The pool that is collected, is used to fund the retirement for all, as well as pay for all their collective medical expenses, unemployment benefits, education for their children and upkeep of their respective estates. Of course, those who earn more would enjoy more benefits, but they directly help pay for those who earn less. The system in Singapore is based on the value of individual effort and is more self-centered, while that in Finland is based on sharing and caring for your less fortunate neighbor. The social safety-net in Finland is also very strong. According to Daniel, “you won't lack anything financially no matter what happens to you. eg. If you have a long term illness/condition that prevents you from working, you get a pension payout for the rest of your life. If your child has a serious condition, they will get a payout as well as a caregiver on top of the free healthcare. In other words, no need to stress.” In contrast, I remember an article I read on ST last year which broke my heart. An elderly man in Singapore killed his own retarded daughter because he was worried she would not be able to fend for herself when he passes on. The values that our society is founded on is important because they set the tone for what kind of people we will become. I personally would like to live in a caring society than one that is selfish, if nothing else, for peace of mind, for we never know when we will need help. —————————— Daniel Yap: Whenever I talk about how life is in Finland, a lot of people will claim that Finland's personal income tax rate is 56%. This isn't really accurate (although I know many websites claim it), so I want to break things down here to the best of my knowledge (probably some small omissions). I'm not actually trying to compare it to SG but people will always want to find some reference point, so I will play along as much as relevant. In all honesty the systems are very different, so it's easier to comment on which SYSTEM you prefer rather than whether one is "superior".  Read More →

I refer to Professor S. Jayakumar's opinion that it is unwise for LHL to step down as Prime Minister mid-stream in the face of C19. I beg to differ. Let me explain. I do not know the latest status of lhl's health conditions but I know that lhl is a cancer survivor, that he almost fainted on stage in the 2016 National Day Rally and only recently, I have watched on national television that lhl perspired profusely under his armpits while speaking in Parliament until that areas of his shirt was completely drenched. Those are clearly unhealthy warning signs and we have been warned and if we ignore them, we ignore them at our own peril. Precisely because life is unpredictable and how long this C19 battle is going to last, nobody knows for sure, therefore, we need a healthy and an alert Prime Minister who will be able to see us through safely and not a sicky one. Absolutely nobody is indespensible, not the late LKY or even China's Mao Tse Tung. If until today our 4G ministars are still not ready and only able to play second fiddle in Parliament and are unable to step up to the plate, then they will forever remain as prepared only but never ready. In the wider interest and safety of Singapore and Singaporeans, I feel that it is better for lhl to step down as prime minister while we still have the luxury of time and advise, guide and support the new 4G Prime Minister from behind, give him the time and space to grow into the job in terms of ability, confidence, stature and acceptance among his peers and Singaporeans. Any sudden or disruptive succession will only compound our alearly severe situation, challenges and uncertainty. That way, to me, is a better and safer option for Singapore. Think.   Simon Lim      Read More →

As the world awaits the final vote count for the American election, I’ve heard a few people say that they hope that Donald Trump prevails for one very simple reason. He appears to be the only President who has stood up to China. Mr. Trump, to his credit, has openly spoken with the president of the other China (Taiwan – or the China with democracy and an open market but a lot less people) and has bolstered ties with the only other Asian nation that can match China in terms of population – India. While the American election has caught the world headlines because it determines the holder of the most powerful office in the most powerful country, the real issue for China’s leaders is closer to home. American Presidents as is well known are limited to two four-year terms. If Mr. Trump wins, it’s a case of waiting another four years. If it’s Mr. Biden, it’s a case of working around another possible eight years. Furthermore, while Mr. Trump has started a “trade war,” with China, he has been useful to them. His divisive rhetoric in domestic American politics, allows the communist party in Beijing to paint itself as a calmer, more stable force to China’s domestic audience. So, while the story on the US election is grabbing the headlines, the more important story is in fact domestic. It concerns the suspension of the Initial Public Offering (IPO)of Ant Financial, which is controlled by Jack Ma, China’s most prominent tycoon out of China. The official reason for suspending what would have been the world’s largest IPO from the Shanghai and Hong Kong stock exchanges was because the regulators had “concerns” about the stability of the market. This sudden suspension of the US$37 billion sent Alibaba shares tumbling along with Mr. Ma’s fortune. More details can be found at: [LINK] The reasons for the suspension of the IPO look political. Call it a case of the Communist Party acting to remind Mr. Ma, that despite his international profile and vast wealth, who was boss. Whatever one might think of Mr. Ma, this move does not speak well of the Communist Party and China’s ambitions to replace the USA as the world power. Mr. Ma, is in many ways, the ideal face of modern China. With a net worth of around US$53 billion, Mr. Ma is the richest person of Chinese descent, surpassing the former title holder, Hong Kong’s Li Ka Shing by some US$20 odd billion. Mr. Ma’s life story reads like a Silicon Valley entrepreneur rather than a traditional Chinese businessman, both in Mainland China and in the Chinese diaspora in Southeast Asia. Unlike the tycoons in capitalist Hong Kong, he’s more than a high-end property trader and unlike the tycoons in Southeast Asia, he didn’t make his fortune in commodities through an alliance with the local officials. Mr. Ma is from relatively humble beginnings, taught himself English and used new technologies to make life better for the Chinese consumer. More importantly, the key difference between Mr. Ma and the average Chinese tycoon (both in China and beyond) is that he’s got an international savvy. Unlike traditional Chinese tycoons who loath publicity, particularly from the Western media, Mr. Ma revels in it. He’s actually confident when communicating in English. He’s also politically savvy. When Donald Trump was elected in 2016 on platform of bashing China for not allowing American business to compete on an equal footing, Mr. Ma went all the way to Trump Towers to offer ways in which American SME’s could use Alibaba to sell to China. Photo: South China Morning Post. Mr. Ma is the hero that China needs. Here is a home-grown entrepreneur, from relatively modest beginnings who built a great fortune by using innovation. What’s there not to like for a country that has global aspirations. Unfortunately, the very things that make Mr. Ma so vital to a modern China and by extension a rising Asia, are the very things that piss off authoritarian leaders who depend on a population believing that they need authoritarian leadership to survive. Mr. Ma is by no means a rebel. He joined the Communist Party and has never done anything to suggests that China should be governed by anyone other than the Communist Party. However, he’s known to be an open proponent of the free market system, something which may not always go down well in a communist society. To be fair to China’s Communist Party, they have not done what Mohammad Bin Salman in Saudi Arabia did. Mr. Ma has not had to spend a day in any form of prison and been forced to sign over his property. However, while this move might seem gentle and semi-legal on the scale of things, this is something that should not happen in a place that has aspirations of prosperity as it sends out a worrying message, particularly to the people like Mr. Ma who create wealth. The message is simple, no matter how much you create, you are still at the mercy of the government machinery. China has risen by soaking up foreign investment. However, this latest move is a subtle reminder to the foreign investment community that the Chinese government can screw with them whenever it feels like it. Hence, foreign investment should be careful about investment in China and getting greedy at the prospect of the billion-person market. More importantly, this message to aspiring entrepreneurs. That message is that no matter how much you create for the good of the nation, you will still be at the mercy of the communist party. The story on Ant’s IPO should worry China’s business community far more than the results of the US Presidential election. China’s communist party can and may undo the years of prosperity of the last two decades if they believe that they need to increate their grip on power.   Tang Li *Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.      Read More →