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Monday, 11 March 2013Tharman not truthful about tax, twists stats to confuse
at 7:53:00 am by Barrie
Tharman Shanmugaratnam is telling Singaporeans half truth. He says that more than 55% of Singaporeans do not pay income tax. But under the GST system, EVERYONE pays tax. We are worse off than the progressive tax system.
Here is a republication of ST's report, which is also all about telling half truths. Progressivity 'not for its own sake'
THE true test of Singapore's tax system is not how progressive it looks, but how it actually helps Singaporeans have better lives, said Deputy Prime Minister Tharman Shanmugaratnam.
...snip...
"The litmus test is whether it will truly help lower- and middle-income Singaporeans have better lives. And that's not a question with straightforward answers in tax policy, or in spending policy," said Mr Tharman, who is Finance Minister.
...snip...
To that end, he emphasised that the income tax schedule is already highly progressive. More than 55 per cent of Singaporeans already do not pay any income tax.
Right. That's the half truth part. Now here's how the snake twists the stats....
Also, the marginal income tax schedule does not run from zero to 20 per cent. Rather, with Workfare Income Supplement, which is paid to low-wage workers, it acts like a negative income tax, extending the tax schedule backwards to minus 30 per cent.
"So our true income tax schedule is actually from minus 30 per cent to plus 20 per cent... It's 50 percentage points. Highly progressive," he said.
No data is given to support the claim above. What we have instead are three graphs to illustrate as shown below.
It can be assumed that because the lower decile groups get rebates and benefits while paying no income tax, they are considered paying "negative tax". Clever play of words, with such an opaque data to wonder what the heck it is all about.
This data is useless on its own. What we need to see is a comparison between the current tax system, which includes the GST on all goods and services, and compare that with what a progressive tax system is like. Only then can we see the real thing.
If the GST is removed, definitely we need to recover the revenue from somewhere. The obvious place is from the rich. So what happens in a progressive tax system is the income tax paid by the rich will shoot up, while the lowest group may also have to pay some amount. But we will see that the lowest group end up paying a less amount on TOTAL tax under the progressive system, because they won't be paying GST anymore.
However, because there is GST, even the poor will have to pay a tax which is higher than if we had progressive income tax. Here is an illustration how much an average person has to pay for GST a year.
If Average Tax paid per Household is $2463, would you be mad? Well, you just paid that!
- http://wherebearsroamfree.blogspot.sg/2013/03/tharman-not-truthful-about-tax-twists.html
at 7:53:00 am by Barrie
Tharman Shanmugaratnam is telling Singaporeans half truth. He says that more than 55% of Singaporeans do not pay income tax. But under the GST system, EVERYONE pays tax. We are worse off than the progressive tax system.
Here is a republication of ST's report, which is also all about telling half truths. Progressivity 'not for its own sake'
THE true test of Singapore's tax system is not how progressive it looks, but how it actually helps Singaporeans have better lives, said Deputy Prime Minister Tharman Shanmugaratnam.
...snip...
"The litmus test is whether it will truly help lower- and middle-income Singaporeans have better lives. And that's not a question with straightforward answers in tax policy, or in spending policy," said Mr Tharman, who is Finance Minister.
...snip...
To that end, he emphasised that the income tax schedule is already highly progressive. More than 55 per cent of Singaporeans already do not pay any income tax.
Right. That's the half truth part. Now here's how the snake twists the stats....
Also, the marginal income tax schedule does not run from zero to 20 per cent. Rather, with Workfare Income Supplement, which is paid to low-wage workers, it acts like a negative income tax, extending the tax schedule backwards to minus 30 per cent.
"So our true income tax schedule is actually from minus 30 per cent to plus 20 per cent... It's 50 percentage points. Highly progressive," he said.
No data is given to support the claim above. What we have instead are three graphs to illustrate as shown below.
It can be assumed that because the lower decile groups get rebates and benefits while paying no income tax, they are considered paying "negative tax". Clever play of words, with such an opaque data to wonder what the heck it is all about.
This data is useless on its own. What we need to see is a comparison between the current tax system, which includes the GST on all goods and services, and compare that with what a progressive tax system is like. Only then can we see the real thing.
If the GST is removed, definitely we need to recover the revenue from somewhere. The obvious place is from the rich. So what happens in a progressive tax system is the income tax paid by the rich will shoot up, while the lowest group may also have to pay some amount. But we will see that the lowest group end up paying a less amount on TOTAL tax under the progressive system, because they won't be paying GST anymore.
However, because there is GST, even the poor will have to pay a tax which is higher than if we had progressive income tax. Here is an illustration how much an average person has to pay for GST a year.
If Average Tax paid per Household is $2463, would you be mad? Well, you just paid that!
- http://wherebearsroamfree.blogspot.sg/2013/03/tharman-not-truthful-about-tax-twists.html
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