Unless you are one of those who earn less than $20,000 (or just a little more) and do not need to worry about tax at this time of the year.
At Singapore Perspectives 2015, Minister Chan Chun Sing made a comment about how only the top 30% of Singaporeans pay taxes.
I had my doubts about that fact and did a check.
And found this table from IRAS.
Table 1: Taxable Individuals by Income Group
(31 March 2014 for the Year of Assessment 2013)
Assessed Income Group
|
Number
of Taxpayers
|
Net Tax
Assessed
|
||||
S$
|
Tax
Resident
|
Cumulative
|
Tax
Resident
|
Cumulative
|
By group
|
Average
Tax
|
S$'000
|
||||||
20,000 & below
|
-
|
-
|
||||
20,001 - 25,000
|
66,410
|
4.7%
|
2,038
|
0.03%
|
0.0%
|
30.69
|
25,001 - 30,000
|
121,292
|
13.3%
|
7,560
|
0.13%
|
0.1%
|
62.33
|
30,001 - 40,000
|
270,703
|
32.4%
|
32,370
|
0.6%
|
0.4%
|
119.58
|
40,001 - 50,000
|
207,250
|
47.0%
|
53,107
|
1.3%
|
0.7%
|
256.25
|
50,001 - 60,000
|
148,420
|
57.5%
|
72,406
|
2.3%
|
1.0%
|
487.85
|
60,001 - 70,000
|
107,135
|
65.0%
|
86,167
|
3.5%
|
1.2%
|
804.28
|
70,001 - 80,000
|
79,742
|
70.7%
|
93,479
|
4.8%
|
1.3%
|
1,172.27
|
80,001 - 100,000
|
108,754
|
78.3%
|
194,188
|
7.4%
|
2.7%
|
1,785.57
|
100,001 - 150,000
|
140,914
|
88.3%
|
575,973
|
15.3%
|
7.9%
|
4,087.41
|
150,001 - 200,000
|
61,029
|
92.6%
|
617,270
|
23.7%
|
8.5%
|
10,114.37
|
200,001 - 300,000
|
53,623
|
96.4%
|
1,141,022
|
39.4%
|
15.6%
|
21,278.59
|
300,001 - 400,000
|
22,535
|
98.0%
|
892,601
|
51.6%
|
12.2%
|
39,609.54
|
400,001 - 500,000
|
10,639
|
98.7%
|
631,110
|
60.2%
|
8.6%
|
59,320.42
|
500,001 - 1,000,000
|
13,714
|
99.7%
|
1,424,507
|
79.7%
|
19.5%
|
103,872.47
|
1,000,001 & above
|
4,231
|
100.0%
|
1,480,357
|
100.0%
|
20.3%
|
349,883.48
|
Total
|
1,416,391
|
7,304,156
|
||||
| Source: IRAS | ||||||
The table tells me that 70% (70.7%) of taxpayers earned less than $80,000 in 2013, and they paid less than 5% (4.8%) of the total income tax collected. Conversely, the top 30% (approximately) paid about 95% of the Income Tax collected. (The top 12% paid about 85% of the total Income Tax collected; the top 8% paid about 76% of all income tax collected.)
If you are paying less than $100 a month in taxes (by Giro installments), or less than $1200 a year, you are in that 70%.
But there is a number missing from the table above - people who earn less than $20,000 a year. IRAS doesn't report that number because they are exempt from tax. Or if you want to be controversial, IRAS doesn't report on poor losers who can't earn enough to pay taxes. In the parlance of Mitt Romney, they are the unwashed "Takers".
So how many of them are there?
MOM provides this statistic on our labour force (see Table 2). According to this table, our resident labour force is 2.1388 million. Of which 1.416 million are tax payers (from IRAS). Which means about 33% are exempt from taxes. Or about 700,000 (705,804 if you subtract the IRAS numbers from the MOM numbers, but "700k" is good enough and easier to remember).
Probably more if more than a few of those with $30,000 or less has sufficient tax relief to bring their chargeable income to less than $20k.
So it is more correct to say than 1/3 of employed Singaporean (approx 35%) do not have to pay income tax, rather than only the top 30% pays income tax.
Table 2: Labour force 2008 - 2013
Mid-Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
Total Labour Force ('000)
|
2,939.9
|
3,030.0
|
3,135.9
|
3,237.1
|
3,361.8
|
3,443.7
|
|
|
|||||
Resident Labour Force ('000)
|
1,928.3
|
1,985.7
|
2,047.3
|
2,080.1
|
2,119.6
|
2,138.8
|
|
|
|||||
Educational Composition (%)
|
100.0
|
100.0
|
100.0
|
100.0
|
100.0
|
100.0
|
No Formal Qualification /
Lower Primary
|
10.1
|
10.2
|
7.8
|
7.2
|
7.0
|
6.7
|
Primary
|
3.5
|
3.5
|
5.3
|
5.4
|
5.2
|
5.1
|
Lower Secondary
|
10.6
|
10.5
|
9.2
|
8.9
|
8.4
|
8.0
|
Secondary
|
23.5
|
24.3
|
20.0
|
20.2
|
19.2
|
18.7
|
Post-Secondary
(Non-Tertiary)
|
9.6
|
7.8
|
12.0
|
11.8
|
12.0
|
11.6
|
Diploma & Professional
Qualification
|
16.8
|
16.9
|
18.1
|
18.2
|
18.7
|
18.4
|
Degree
|
25.8
|
26.7
|
27.6
|
28.3
|
29.4
|
31.5
|
|
|
|||||
Median Age (Years)
|
41.0
|
41.0
|
41.0
|
42.0
|
42.0
|
42.0
|
|
|
|
|
|
|
|
Labour Force Participation Rate (%)
|
65.6
|
65.4
|
66.2
|
66.1
|
66.6
|
66.7
|
The other thing to think about is that IRAS provides the number of tax-payers at each income group, but it does not mean that one eventually will be paying taxes.
After taking into consideration deductibles (donations) and tax reliefs - Earned Income, NSman, CPF, Parents, Children (including Working Mother's Child Relief), some of the "tax-payers" may not actually need to pay any taxes.
Or they may have one-off tax rebates like the Parenthood Tax Rebate.
[This is a tax REBATE. So after you work out your chargeable income and work out the tax you have to pay, you then deduct the PTR from the tax. So you may end up not having to pay any taxes for the year... or a few years.]
So those exempt from tax or who need to pay no taxes (after deductions, reliefs and rebates), may be higher - 40%? More? Are we closer to the US 47% of takers?
------
Those earning between $20k & $30K account for only 18% of tax payers, and provided only about 0.16% of the income tax revenue - less than $10m in revenue. Total Income Tax revenue was $7.3 billion.
Would it make sense to zero-rate the first $30k of chargeable income, then? That 2% on the first $10k above $20k is only bringing in $9.6m.
IRAS won't miss that, right?
It seems like it is only $10m, BUT, all tax-payers will save on the $200. The $10m only applies to those earning less than $30k. However, there will be savings for all the rest - all 1.23m other taxpayers - the costs will be about $250m. The 7.3b revenue will be reduced to just over $7b (ceteris paribus).
------
- Other observations: 0.3% of taxpayers earn over $1m and they account for over 20% of the income tax revenue. On average they pay about $350k in Income Tax. Each. What they pay in income tax is more than what almost 98% of tax-payers make.
- The highest tax rate (20%) is levied on those earning over $320,000. There are less than 2% of tax-payers with that level of income.
- There is a bulge in taxpayers earning between $30,000 and $60,000. They account for about 45% of tax payers. Then there is a smaller bulge of those earning between $80k and $150k, comprising about 18% of taxpayers.
- 88% of tax payers pay only 15% of the income tax revenue. Conversely, the top 12% pays 85% of income tax revenue; the top 8% contributed about 76% of all income tax collected, and the top 2% contributed almost half (48.4%).
Or you can compare our tax system (and outcome) with say, the US?
Or check if it is true that 47% of US citizen are freeloaders.
----------
So if you are paying income taxes, you are better than about 33% of the working population who do not earn enough to pay income tax.
If your tax is more than $1000, you are better off than about 65% of all tax payers. And approximately 80% of all employed Singapore Citizens.
Alright, you say. So I pay taxes, and that means I'm better off than at least 33% of the working population in Singapore (excluding foreign workers of course). Can I be a little LESS fortunate and avoid paying taxes?
Well, I don't know if you can avoid income taxes completely, but maybe that will be my next post.
No comments:
Post a Comment