“Brand Singapore” is often associated with transparency, efficiency and modernity. The country has without a doubt made a name for itself as one of the Four Asian Tigers and having one of the world’s most powerful passport.
But recently, the Singapore brand might have taken a bit of a blow. Despite its achievements, Singapore was ranked among the bottom 10 countries worldwide in terms of reducing inequality. According to Oxfam’s Commitment to Reducing Inequality Index 2018, Singapore’s ranking dropped from 86 last year to 149 this year due to the number of “harmful tax practices” that Singapore has.
This includes increasing personal income tax by 2% while retaining a “very low” maximum rate of 22% for the highest earners. Among the list of countries in the bottom 10 include Bangladesh, Laos, Madagascar, Sierra Leone, Chad and Haiti.
Oxfam also described Singapore to be a tax haven alongside countries such as Cayman Islands.
According to the index, tax dodging by corporates and individuals are costing both developed and developing countries “hundreds of billions of dollars” each year, with all of it undertaken by the wealthiest in society. As such, this makes the tax system less progressive and is also the main reason why countries collect far less corporate and personal income tax than they should, Oxfam said. This trend drastically reduces the revenues available to spend on tackling inequality.
Singapore’s low score can also be attributed to low level of public social spending, with only 39% of the country’s budget in total going to education, health and social protection. While spending on education in particular has increased from an average 14.7% to 14.8% of government budgets, Singapore, Vanuatu and the Democratic Republic of Congo saw some of the biggest decreases, Oxfam said. Nonetheless, Oxfam said that almost all of the countries that allocate the highest proportion of their spending to housing are developing countries, including Singapore.
The index also noted that Singapore has no equal pay or non-discrimination laws for women, and that its laws for sexual harassment and rape are inadequate.
While more than half of the countries in the index such as South Korea, Indonesia and Japan have increased their minimum wages more rapidly than per capita GDP, Singapore however only has minimum wages for specific sectors such as cleaners and security guards. Seeing that some countries are taking “dramatic steps” to change their systems when it comes to minimum wage, Oxfam said Singapore should be feeling “increasingly isolated” and it is “ever more important” for the country to introduce minimum wage now.
Since the release of the index, Minister for Social and Family Development Desmond Lee, said Singapore seeks to achieve “real outcomes” in education, health, jobs and housing rather than satisfy a “collection of ideologically driven indicators”, Channel NewsAsia reported.
He argued that it is more crucial to look at the outcomes achieved, disputing Oxfam’s assumption that high public expenditure and high taxation equates commitment to combating inequality.
He said that although half of Singaporeans do not pay income tax, they benefit “more than proportionately” from the high quality infrastructure and social support Singapore offers.
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