Saturday, September 26, 2015

Will taxing the rich make Singapore richer?

Reference: S'pore's total tax collection hits record high of $43.4b

So there are now 4,557 people earning more than $1 million each.

Their combined income came to $8.63 billion and they paid about $1.6 billion in income tax.

That works out to be 18.5% tax rate.

Singapore's total tax revenue recorded the 12 months before March 31 is $43.4 billion.

Those 4,557 high earners are only contributing 3% of the total tax revenue.

Say for example if we were to tax the hell out of those rich people at various tax rates below
30% - 2.59b in tax - 44.39b tax revenue - 5.8% of total
40% - 3.45b in tax - 45.39b tax revenue - 7.6% of total
50% - 4.32b in tax - 46.12b tax revenue - 9.3% of total

The rest of the so-called lower earners contributed $41.8b.

Say we increase the tax of the rest by 1%. That will give us an additional $4.18b.

To get that amount with high earners, we had to increase the tax level of high earners to you're-going-to-piss-them-off 50% level.

That's the law of large number. You will get a more significant result when you increase a small percentage that affects a large number.

Thursday, September 24, 2015

Indonesia's comments on the 2015 haze

Shocking statements from “senior people” in Indonesian gov’t: Shanmugam

So what can you do, Singapore?

Nothing would be quite an accurate answer.

I can't stand all these wayang that's playing out on the international stage where politicians are ALL TALK NO ACTION (NATO). It's the biggest wayang playing live right now.

Shuqun student bullied for 5 months

Source: TMG Exclusive: Teacher knew about the bullying, teen was bullied for 5 months before video

There's this Shuqun Secondary School student who was bullied for 5 months before anything was done.

The teacher has failed to protect the student who was unable to protect himself. There should have been follow-up to see if the initial verbal warning to the bully is actually working. Apparently not in this case and the victim has to suffer because the teacher is incapable of teaching discipline and conduct to the bully.

Parents can avoid this type of behaviour by asking their kids about school and work occasionally. It's most important to foster an open-minded culture where kids can talk freely and won't be afraid to talk about this type of things.

This case reminds of the SMRT bully case where someone else has to stand up for the victim because the latter choice to suffer in silence.

People need to stand up for yourself because nobody else will do that for you. Your happiness should not have to depend on others.

Monday, September 7, 2015

The ball is round

"The ball is round" is the most stupid answer you can give to any question.

Do you want to pay more taxes?

Another great post I spotted on Facebook, written by a sensible person. In short, she wants her CPF money back.

CPF is a savings instrument. It's supposed to pay you a monthly allowance when you retired.

So the reason she wants her money back in lump sum is because? Or is it because her CPF account is not giving her enough money monthly?

One of the main reasons why you can't take out money is because the government don't think people have that responsibility to manage their own money. If you look at the number of people who post irresponsible comments on Facebook, you ought to be scared. What will these people do if they do get back their lump sum CPF payment?

Say someone tells you that there's a good stock you should buy and you bought it and one year later you lost 10% of your money? 10% of your life savings is a lot. Put in another way, you lost 10% of your life. When you have a lot of money and don't have the financial knowledge to handle them, it's dangerous. People are greedy and like a good deal. When you see a good investment, you will want in. And if you're not savvy, then the risk is high. I recently bought shares and it went down 25%. The money I used, I can write off 100%. But when you're old, and you lose 25%, your heart will sink and you'll never forgive yourself because you won't have the luxury of time to earn them back.

It's not like the government wants to be a nanny state. In fact the opposite, they want you to be responsible and independent. Besides CPF, have you not been saving money outside? If you only depend on government to save money for you using the CPF system, you might not be in a good situation. You could be a low wage earner and cannot save money on your own, sure. But without CPF, as a low wage earner, you won't even be able to save anything without CPF.

Personally for me, I never depend on CPF for my savings. I treat it as an invisible savings account. On my own, I work from 9am to 1am. I work hard and save money while I'm young. I don't want to have to depend on CPF when I'm old. But it will be great if there's a monthly allowance from CPF when I'm retiring. Also when I'm buying a flat, or as many people say leasing a flat, the invisible money suddenly turns into something I can use to finance the purchase.

Source of the story below: Facebook

This is the standard question we get asked when we question if we should give an allowance to our old folks, provide them better healthcare or get our CPF back at 55.

Almost immediately, and almost always, the answer is a straight no. It is so easy to predict Singaporeans, it becomes sad.

When I just started work, Singapore was not a tax haven. Our personal income tax rate could go progressively up to 33%. In my first job as a non-executive, my basic salary was $1,100 but I had to pay 12% income tax.

25% of our monthly income went to our CPF account, and our employers paid another 25%. Singapore was not a developed country, and unlike today, we didn't get the kind of respect and admiration from people all over the world. We strove hard to put our country on the map.
It was tough, but we didn't mind. I don't ever remember complaining about tax. To me, it was a privilege to have an ability to earn, and paying tax was and has always been a responsibility.

Singaporeans were a much happier bunch, then. We understood there were children's education to pay for, and we wanted to build a nation that is strong. We saw the airport move from Paya Lebar to Changi, and then in the 80s, Terminal 2 was built. Now, we have Terminal 3.
When the MRT roared into town, we were curious how fast it could travel and would sometimes race against it. We were impressed how it made life so much more efficient. It cost us billions. Yes, it cost us, the taxpayers, billions.

In a few years, I'll be reaching 55 years old. It is supposed to be something to look forward to. For all the financial sacrifices we made in our younger days, we were looking forward to that delayed gratification.

We were promised that we could have our money back after loaning it to the country for decades. Three decades. But now, we are told we are not capable of managing our own money and we cannot have it back or the government might increase tax to feed us if we squander it away. Me? Not capable of managing my own money? Joke.

As if it is not enough to take away the right to our money, they must take away our dignity as well.

And you think this is right. You, the ones we put into schools for a proper education. The ones we give up well paid jobs to teach, the ones we care about. The ones we built the MRT, the best airports and harbour in the world as assets to grow your GDP for.

And worse, you think it is fair that the old folks collecting cardboards do not deserve social welfare. They too contributed to your expensive lifestyle. You think it is right that the tissue sellers should carve out a living on their own. Just so? Just so you need not face the possibility of higher taxes or a run down of reserves that WE and THEY built up?

What happened to the CSR hours that you put in? Has the education system that we paid for to educate you taught you that you need only live with clear conscience just once a year?

Yet, I am fortunate that I am only in my late 40s, and I can still feed myself, and I can still run my companies. What about those from the pioneer generation? How do you expect them to fend for themselves when they don't get their promised CPF, are too weak to work, and cannot afford basic healthcare? You really think they are pushing cardboards, tens of kilos a day... for fun?

No matter which party you favour, have a little conscience, have a little heart. Don't be too cruel with your words to those who built the country for you. Don't be too selfish and claim all glory to yourself.

We are a country, and when we were young and able, we did not calculate the tax monies we paid for your education, your parks and your sporting facilities. It is beginning to look like by making you prosperous, we have created some monsters without any sense of social justice.
Everybody grows old and will become helpless one day. I will, and so will you. Karma is something I don't ever mess with. What about you?

Singapore Savings Bonds are now available

I think the Singapore Savings Bonds is a really good idea. It's basically low risk investment for people who are not so savvy at investing.

The other great advantage is that it keeps money in Singapore and not let it flow out.

Sunday, September 6, 2015

Taxing the rich to give to the poor

Mr Tharman Shanmugaratnam is one of the MPs that I respect for his sensibility and logical thinking. There aren't many in the PAP that I know of that's at the same level he's playing at.

This is one of the video that came from the election rally of him explaining the tax system:

Mr Tharman Shanmugaratnam explains about our tax system and how it has benefited our middle income and low income residents in Singapore at the Holland Bukit Timah GRC & Bukit Panjang SMC Rally tonight.Listen to the end about whether GST will be increased in the next 5 years.Video Credits: Toggle.Sg#GE2015 #PAP4SGGet breaking news, live updates, and exclusive content, on the go, please click:

Posted by People's Action Party on Saturday, 5 September 2015

A lot of people have commented that the government should tax the rich more. I feel the same way too but the thing is, the effect return you get from the tax will not significantly increase.

In the video, Tharman explained that the rich are able to move money around. So if you increase the tax, those rich people will just move their money around, reclassify their earnings, or do whatever their tax lawyers advise. At the end, you're not going to get a lot of out of them.

If you don't understand why taxing the rich is not the best solution, then you're probably not in the rich tier. I'm not in the rich tier either, but I do know that, yes, you make money so that they are not taxable.

In the end, it will be the middle income who will end up paying more taxes if more social benefits are to come from the government. Because it's this huge group of people who don't have the financial intelligence to do what the rich do.