My eyebrows rose thrice, part 3: Hurtful

It was a strange choice of a word, and it jumped out at me. People’s Action Party member of parliament Vikram Nair (right) said he found it “hurtful” that Chen Show Mao (Workers’ Party) had implied that the PAP government had not done enough for vulnerable groups.

In my mind’s eye, I instantly saw a picture of a grown man running to a corner to cry. His feelings had been hurt.

What never-never-land does the ruling party live in? Do PAP members of parliament seriously expect opposition members to concede that the government had done ENOUGH for whatever section of the population they happen to be discussing at that moment? Is that the opposition’s role in politics?

For the record, here is the news snippet where the cited word came from:

The previous day, Mr Chen had urged the Government not to look at social spending as a one-way outflow of resources, but an investment in human capital which will yield returns in ‘unlocking’ economic, social and cultural value among Singaporeans.

Yesterday, Mr Nair said Mr Chen implied that the PAP Government had not done enough for vulnerable groups, or that it cared less about them. He found this ‘hurtful’.

‘I think many of us here have been working year in, year out, helping the vulnerable groups, and it is pretty hurtful coming from Mr Chen because he might have held this belief for a long time, but he came back only quite recently to help in this,’ he said.

– Straits Times, 1 Mar 2012, Vikram Nair: Show me the money, Chen Show Mao, by Rachel Chang

Such a subliminal choice of a word brings to mind similar situations where people expect to be praised for their good intentions, even though they have fucked up. They’ve been incompetent and made a mess of things, but when you’re about to lambast them, they defend themselves by pointing to their good intentions. We meant well — they say — therefore you shouldn’t criticise us.

I have very little patience for people for whom intentions and feelings trump competence. The issue has nothing to do with whether or not the PAP meant well towards vulnerable groups or cared for them. The issue is whether or not the government has delivered.

* * * * *

Vikram Nair also took a swipe at Chen Show Mao for relocating to Singapore only just before the 2011 general election. Chen’s career had been entirely abroad, in America and China. The point Vikram tried to make was that PAP members, perhaps like himself, had been working the ground, extending help to constituents while Chen parachuted in.

There are two things one would need to beware of in an insinuation like that. The first is to be careful whether it is true. Haven’t there been plenty of examples of PAP MPs parachuted into constituencies just months before an election too?

The second is more insidious — that “helping” at a micro level is cast as good whereas doing politics at a macro level is seen as inferior. This kind of valorising does not withstand analysis. I see its fallacy all the time in charity work, for example. When one works within the system to try to deliver help, one effectively legitimises the system. Intentionally or not, one begins to foreclose other ways of doing good — for example, when a do-gooder says, “we musn’t be too hard on the minister and cause offence even when he is a do-nothing dud, because we need his goodwill and co-operation in order to help the cases we handle.” Many people doing charity work have stopped to ask themselves whether they are actually perpetuating the abuses of the system by going around applying plaster to the wounds the system inflicts.

Sometimes it is the outsider who overturns the system that does the most good. He has not helped any individual directly, but by putting an end to the grind, he actually helps more people.

Wasn’t there a religious leader who said he would not give fish to the hungry; far better that he taught them how to fish? By the same token, helping the vulnerable at the micro level may achieve less than changing the overall scheme of things.

* * * * *

This brings to mind another exchange during last week’s parliamentary debate.

The Workers’ Party was thus wrong to want healthcare spending to rise from the current 1.6 per cent of GDP to the global average of 6.1 per cent of GDP, [Deputy Prime Minister Tharman Shanmugaratnam] said.

That level of spending would mean a spike in tax rates. If the increase were funded through the Goods and Services Tax, GST would have to go up from the current 7 per cent to 20 per cent. If it is through corporate income taxes, it would mean a rate hike at the top end from 17 per cent to 40 per cent, and if through personal income taxes, rates would go up from 20 per cent to 60 per cent.

Mr Tharman warned of the real limits to raising taxes at the top end, given competition from other cities. As it is, half of personal income taxes here are paid by foreigners, and the rest by well-educated, highly mobile Singaporeans.

– Straits Times, 2 Mar 2012, Grow economy to forge inclusive society: DPM; Strategies to tackle inequality are in place, Tharman assures MPs, by Lydia Lim

I hope Tharman does not think his argument is slam-dunk obvious, because when I read the above, I told myself: So why not do it? Let’s perhaps use a mix of corporate and personal income tax, with both going up halfway to Tharman’s “scary” levels in order to fund a more assured healthcare system. That means corporate income taxes going up from 17 percent to 28 percent and the top rate of personal income tax going up from 20 to 40 percent.

Sure, it may mean that even the middle-classes may see their income tax rates creep up in tandem with the top rate, but why do we assume that people won’t accept that?

It’s like insurance. We pay a knowable premium in order to fend off an unpredictable, unknowable cost. So if we tell Singaporeans that a large part of their healthcare cost risk will be socialised if they pay higher taxes, I can foresee many people being convinced. Yes, they will say: we pay more each year so that we avoid the risk of a huge catastrophic cost in the future.

The funny thing is this: I have yet to see the government deny that people would agree to this bargain. The PAP may even secretly fear that I am right and that people will choose the socialised option if presented to them. Look closely and you will see that the government’s line against higher taxes is not that Singaporeans won’t pay them, but that foreigners won’t pay them. And that rich (which in their mind is equated with talented) Singaporeans would flee this place for another tax quasi-haven.

And this is where we come up against the prevailing paradigm. The PAP sees rich people as critical to economic growth. No foreigners coming in, no multinationals relocating here, no GDP increase — the logic goes. No rich Singaporeans, no domestic job creation. This is followed by another logical reduction: foreigners come here and rich locals stay only if tax rates are among the lowest in the world.

Many are beginning to question this. Have we not considered other, domestically-based, sources of growth? Have we not, by being seduced by the idea that only foreigners have talent, psyched ourselves into thinking that non-rich Singaporeans cannot produce growth and thus, as self-fulfilling prophecy, smothered indigenous talent and creativity?

Furthermore, even if we wish to tap the talent and investments that foreigners can bring, why do we assume that they won’t relocate here unless we have the lowest tax rates? In fairness to the government, they themselves speak of how the “rule of law” (please don’t laugh), security of intellectual property, efficient transport and communications are other pull factors. So why don’t we enhance these and other pull factors and not rely on the narcotic of low tax rates? How about a lively city that celebrates human freedoms, with a vibrant arts scene, or one where public services are not so uncomfortably, crushingly crowded? How about a city where Singaporeans feel a strong sense of attachment to, to counter any urge to emigrate? Such a city would have to be one where people feel they can make a difference — in other words, back to questions of freedom and empowerment.

It’s quite ironic that this government knows very well Singapore cannot compete on the basis of cheap labour cost. It’s no use racing to the bottom, they remind citizens, we just have to create value to justify our higher labour cost. So why does the same government insist on racing to the bottom with respect to lowest tax rates for the rich? Why don’t we focus on creating value instead?

Might it be because this government is a captive of rich Singaporeans, and what better way to justify low tax rates for themselves than to argue that the foreigners must have that? And while we’re at it, hold ordinary Singaporeans hostage by threatening that they (the rich and “talented”) will decamp if their privileges are withdrawn?

33 Responses to “My eyebrows rose thrice, part 3: Hurtful”


  1. 1 JWong 5 March 2012 at 18:16

    Be prepared for another lawyer’s letter or lawsuit from Vikram. The PAP and PAP-affiliates seem to be in a particularly litigious mood at the moment, regardless of the merits of their case or lack thereof.

    • 2 Reza 5 March 2012 at 23:25

      Yeah yeah yeah, they’re not even bothering to consider the effect these lawyers’ letters are doing towards the electorate. So petty. Just a small comment which probably only a handful knows exist and OH NO LETS SEND A LAWYER’S LETTER!!!

      Not winning any votes from me. 2016, bring it on.

    • 3 Commentor 6 March 2012 at 08:09

      Slightly off topic. Another good reason for Yale not to set up its campus in Spore. Where are the civil liberties to express yourself if you can justify it?

  2. 4 Anon 5 March 2012 at 18:58

    Therein lies the flaw of the GRC system. MPs like Vikram Nair cake-walks in (on someone else’s coattail) and take a high-minded approach. This is also called the “mini-LKY” mentality — everyone thinks he is a mini-LKY, his word is the indisputable Truth and any disagreement must be met with crushing force, including going personal. I think he has the right to say things like that only when he has earned his stripes – either as someone who has contributed greatly to society prior to joining politics, or a real LKY. To do so when one is essentially in his first few months of politics speaks poorly of him — be humble, use less incendiary language, show mutual respect and the points you are making will come across better.

  3. 5 Lye Khuen Way 5 March 2012 at 20:27

    There are many who could not understand why the DPM and his other PAP colleagues are so fixated on the “how to fund” those proposals, me included.

    There is one simple way out. Cut/ reduced the spending on Defence and funding of MOE’s foreign “scholars”.
    The Billions we expend each year on military hardware must have the Israelis wondering whether Iran is our biggest worry rather than theirs .

    And yes, I would not mind paying more direct taxes, not that I am earning much, if I can be assured of some social / medical safety net.

  4. 6 David 5 March 2012 at 20:57

    Did you do any analysis on whether the numbers are correct?

    If the increase were funded through the Goods and Services Tax, GST would have to go up from the current 7 per cent to 20 per cent. If it is through corporate income taxes, it would mean a rate hike at the top end from 17 per cent to 40 per cent, and if through personal income taxes, rates would go up from 20 per cent to 60 per cent.

    It just seems that these quoted rates are way too high? And conveniently quotable, 20%, 40%, 60%. Wonder what are your thoughts on that.

  5. 7 Chee-Kong LEONG 5 March 2012 at 21:12

    If the relatively much higher personal income tax rates in Canada compared to Singapore (universal health care in Canada versus Singapore’s ??) is so unattractive, why are more talented Canadians not relocating to Singapore’s very low tax regime? The Canadian top marginal income tax rate of approximately 51% for an individual is exigible on taxable income in excess of about Cdn $100,000.00. I will provide more accurate figures for taxation year 2011, when I returned from the gym. CK Leong, Toronto, Ontario, Canada.

    • 8 yawningbread 5 March 2012 at 22:43

      And I would guess that, if given a free-ish choice, more Singaporeans (as % of our base population) would rush off to migrate to Canada than the percentage of Canadians relocating to Singapore. Now why might that be?

      • 9 Poker Player 6 March 2012 at 00:08

        Excellent point. I want to take it further. Somalia has no tax collection infrastructure – it is de facto the perfect tax haven.

        My point is the government makes it out like the working and middle classes has no bargaining power over how much to tax the rich.

        Our bargaining chip is our consent to maintain and live under the order that we do. And this order benefits the rich the most.

        The fact that our government never presents this side of the bargain betrays who their true constituency is.

      • 10 Gazebo 6 March 2012 at 01:22

        The best paper currently on this topic, is Young and Varner (2011).
        The authors used a natural experiment — New Jersey imposed a millionaire tax while other adjacent states did not — to show that the elasticity of migration response to higher taxation is minimal. Most people do not make decisions simply on taxation rates. Search for the paper using Google scholar, National Tax Journal, June 2011, 64 (2), 000–000. The take home point of the paper ultimately, is that people root themselves at a location, and form social compacts with social institutions. If tax rates are the sole attractions for Singapore, then the country inherently must be a really unattractive location.

        The problem with the present government is this instant tree mentality. The government just wants to get hot money to flow in, rather than invest in long term strategies to root people and institutions. Millionaires might choose to “migrate” to Singapore to take advantage of lower tax — but are they actually interested in active citizenship? Or are they more akin to likes of Jet Li who spends probably no part of his actual life in Singapore but is a token Singapore citizen?

        This obsession with hot money is showcased most dramatically in attracting HQ projects from MNCs. These projects frequently employ minimal number of people, and only look good on paper because they route global profits through Singapore to take advantage of tax breaks and concessions. However no real economic activity actually take place in Singapore. This also demonstrates why GDP as a concept is flawed. The actual retained income in Singapore is remarkably low, probably the lowest in the world, except for the likes of Cayman Island and Monaco. Chen Show Mao in his WP rally speech back in May also mentioned this.

    • 11 Jammie Wong 6 March 2012 at 12:06

      actually, we should even look at canada’s case at more macro level. how much does taxation in canada contribute to its yearly revenue?

      how much Gold/Oil/Gas/Iron Ore/etc. contribute to canada’s revenue?

      ..only then, meaningful discussion – whether Singapore can follow canada’s taxation, will take place.

  6. 12 Chow 5 March 2012 at 21:17

    I was, at first, surprised and shocked that 50% of our income tax is collected from foreigners working here, while the other 50% is collected from, well, highly mobile and well-educated Singaporeans. I presume he meant Residents. In the first place I thought to myself, “Golly, here we have 26%-27% of Singapore being foreigners and they pay 50% of the income tax? Surely we have a problem here because it either means that most Singaporeans are stuck in low pad jobs or we are a nation of tax-evading weasels.”

    I finally looked up some statistics and found out that, as usual, Tharman was stating the obvious. The number of foreigners in Singapore stands at 1.395 million (rounded) while Singaporeans stand at 3.789 million (rounded). But thanks to your table and trawling the MOM website, I found out that economically active residents from the age of 15 and up number 1.999 million. Taking away around an estimated 0.229 million persons who don’t pay taxes (I set the peg at 1.6k per month as the level at which they will not pay tax and assumed that the distribution in the category $1,500 to $1,999 was uniform) leaves us with a base of 1.77 million Residents who pay taxes. I assume he considers these the highly educated and mobile (go figure). This puts the ratio of foreigners to Residents paying tax at 0.79. Well, not all foreigners are that well paid I guess, so assuming a similar wage distribution structure (i.e about 11% are underpaid that they do not pay taxes) we get a ratio of 0.7 thereabouts.

    So yes, it is hardly surprising that 50% of income tax comes from foreigners and 50% comes from Singaporeans given that the numbers in the work force are almost parity. I would be very surprised if it were anything but that. Perhaps foreigners pay a tad more because they are about 70% to 80% of the workforce, but then I need to dig more and I don’t know if I can find such data anyway.

  7. 13 Chow 5 March 2012 at 21:24

    Postscript: I seem to recall that during the General Elections Tharman claimed that only 50% (or some similarly low number) of Singaporeans paid taxes. I was mightily puzzled then and looking at the statistics I came to conclude that he was stating the obvious because he must have included ALL Residents whether or not they were economically active. I guess he’s doing it again.

    • 14 yawningbread 5 March 2012 at 22:40

      Actually if he meant just “taxes” as opposed to personal income tax, he would be wrong! Everybody ends up paying some GST, even if you’re not working.

  8. 15 Harish 5 March 2012 at 21:39

    I wonder which of the following tax havens the “mobile rich” and “mobile foreigners” would flock to, permanently, following an increase in income and corporate taxes in Singapore:

    – Andorra
    – The Bahamas
    – Cyprus
    – Liechtenstein
    – Luxembourg
    – Mauritius
    – Monaco
    – Panama
    – San Marino
    – Seychelles
    – Switzerland

    I would find reasons such as cultural immersion and retirement a lot more compelling.

  9. 16 Ziggy 5 March 2012 at 21:41

    This is what Mr Tharman said in parliament:

    “If Singapore had a first world social safety net, then this may mean first world taxes.”

    If Singapore had a decent wage system, paying first world taxes would not be an issue. Come to think of it, there would also be no need for “subsidies”, “goodies” or “progress packages.”

    But then again, a decent wage system would also mean a more empowered citizenry…..and why on earth would the PAP want that?

  10. 17 Poker Player 5 March 2012 at 22:08

    Singaporeans need to disabuse themselves of the notion that the rich are rich because of their talent.

    Ever heard of “it’s not what you know, it’s who you know”?

    Sure, a handful of the rich get rich by through their talents and benefit society through their industry.

    But most wealth is through incumbency. The talent, if you can call it that, is in maneuvering within the network of incumbency. Places need to be filled – all that is required is not to be a complete fool.

    Some of these “talent” are actually clueless enough to believe they are where they are because of their talent. They self-describe as “elite” and produce offspring who do it even louder…

    Most of our “talent” have just enough talent to give us the Tang Dynasty theme park and our semiconductor industry…try leaving the country with that…

  11. 18 Cheong 5 March 2012 at 22:28

    This is a very level-headed & measured piece, Alex.

    I am surprised that I could not find the words ‘Nigeria’ & ‘Scam’ anywhere on this article..(well, until now..)

    Shows that you have took on the learnings!

  12. 19 yuen 5 March 2012 at 23:25

    YB: what specifically you found “hurtful”? both government and opposition guys follow prepared talking points; the government talking points are old so do not get much attention, except when the speaker’s particular expression contains some scoldable parts which then get reposted many times on the web; perhaps because he was born in taiwan and studied/worked outside SG in the last 30 years, with little chance to experience SG life at the ground level, Chen Show Mao’s speeches have been romantic but mushy, with various quotable bits; these bits are also reposted many times; but either way, there has been little advance in policy thinking from the discussion

  13. 21 Orwell 6 March 2012 at 00:13

    If you own a car for 40 years and pay Coe and ARF guess how much car related taxes you would have to pay , it may just work out to be 40% but without do social security.

  14. 22 Robox 6 March 2012 at 01:33

    I will take at face value what was implied in Tharman’s assertion that foreigners and well-educated Singaporeans will flee Singapore if personal income taxes were to be raised. (Or why would he have described these Singaporeans as “highly-mobile”?)

    I personally don’t believe that people make descions over where to relocate based on any one single factor. Like personal income tax rates. If they did, then I would say that we are also attracting only the greedy among foreigners and have bred a culture of insatiable greed in a class of Singaporeans.

    More likely, the majority of people make decisions about relocating after weighing an array of factors.

    However, if the PAP government is right, then wouldn’t that further imply that there is nothing else at all – if not for the money – that is attractive enough in Singapore for people to want to stay?

    The PAP government seems very convinced that this is indeed the case because they have advanced similar arguments in favour of laxity in immigration policy: that these much sought-after new immigrants will just go elsewhere

    If there is nothing else that is attractive enough in Singapore as a home if not for the money, shouldn’t our fingers be pointed at the same PAP government who has caused it to be so?

  15. 23 jax 6 March 2012 at 03:07

    re have we psyched ourselves into thinking non-rich sporeans cant produce growth: coincidently, the fact that spore will have to depend on blue collar workers
    to raise productivity was a topic tharman spoke on in october. not sure to who.

    his point was that it is important to have a culture of skilled blue-collar labour. unfortunately, younger Singaporeans shun manual work or work that involves serving somebody, and as a result more n more it is the foreigners who r doing such work jobs.

    he also said: ‘But we can’t be a country of office workers. Productivity rises are not as strong in the office sector over time, and not everyone is going to be a creative or hot-shot professional. Wearing a tie or working in an impressive building does not get us far.’

    lee hsien loong has also said tt spore should not sell itself short; that we have lots of things going for us. and he wasn’t talking about tax.

    so it wld appear they know all this but are pushing quite a different line. could it be becos the suggestion on spending more on health came from the WP?

  16. 24 Chee-Kong LEONG 6 March 2012 at 06:37

    Perhaps, either Mr. Chen or the Workers Party may wish to consider issuing a challenge to the Honourable Member to contest in a SMC in the next General Elections, and debate on the matters which are “hurtful” to the Honourable Member.

  17. 25 Buying too much insurance 6 March 2012 at 07:15

    “It’s like insurance. We pay a knowable premium in order to fend off an unpredictable, unknowable cost.”

    Many of us already pay lots of insurance premium. For sum insured of S$100k premium is about 2k a year. Using the example in the earlier article, the person earning 2.9k a month pays only $128 worth of income tax.

    Many people I know spend like 1/3 of their monthly salary on insurance for themselves and their dependents. For these people it is not hard to convince them on the concept of increasing personal tax for better social safety nets.

    • 26 lobo76 6 March 2012 at 17:27

      but most people buy saving insurance. There is a value at maturity. This insurance via tax is more like term insurance (the cheap one but you don’t get anything ‘returns’) but better, because it is life time.

  18. 27 a@hotmail.com 6 March 2012 at 08:53

    “….That level of spending would mean a spike in tax rates. If the increase were funded through the Goods and Services Tax, GST would have to go up from the current 7 per cent to 20 per cent…..”

    Why can’t the government reduce say 2% from the defence budget and then increase the healthcare budget by 2%. I think our defence budget is way out of proportion as compare to other countries much bigger then Singapore.

    There are only 6 elected opposition MPs now and we are starting to see the government defending their policies with silly reasoning. What amaze me more is that the pap mps are extremely eager to help the ministers to defend their policies and put down the opposition MPs. Shouldn’t the answering and defending of the policies done only by the ministers?

  19. 28 Chanel 6 March 2012 at 10:04

    Alex,

    1) Mr Chen Show Mao responded to Vikram Nair’s rude outburst in Parliament so beautifully. He said that since government revenue is not earmarked for specific programmes or areas of spending, any discussion of how the WP’s suggestions should be funded “would of necessity entail a discussion of total government revenue and spending”.

    Why should any proposed increase in healthcare spending be considered only after all other public spendings? For eg. why should the government set defence spending FIRST before considering healthcare spending?? Why is S’pore’s defence spending as % of GDP by far the highest in the region? Is it because we are paying top salaries to the countless SAF scholarships who go on to become PAP MPs/ministers? Also, why buy state-of-the-art military equipment, but neglect the welfare of the men operating these???

    2) I find it highly ironical for Vikram Nair to be “hurtful” when he became PAP MP only last year! Prior to that, he was merely blogging for YPAP’s P65 Blog.

    3) Our ministers have strong vested interest to keep tax rates low. Their interests are aligned to the top 1,000 earners of this country. They will thus use whatever excuse there is to “justify” a low tax regimen here.

    Why haven’t significantly high tax rates in the US, the UK, France, Germany, Japan, Malaysia, Indonesia, South Korea, Taiwan, China, Philippines…and almost all other countries….led to a huge exodus of MNCs or rich folks????

    Why is it that Hong Kong, which has lower income tax rate than S’pore, can spend materially more on healthcare (as % of GDP) than S’pore??

  20. 29 Cocomut 6 March 2012 at 10:10

    Did our ministers/PAP MPs worry about how to fund their salaries when they started pegging ministerial pay to top private sector?? No, they didn’t.

    Did our ministers/PAP MPs worry about how to bridge the resulant Budgetary gap when they lowered the top income tax bracket? No, they didn’t. They just increased GST!!

    Did our ministers/PAP MPs worry about the lost tax revenue when they suddenly abolished Estate Duty??? No…..because someone’s mother is dying.

  21. 30 jentrifiedcitizen 6 March 2012 at 11:59

    glad u wrote this commentary as been getting quite sick and tired of the cocky arrogance shown by Pap Mps like Vikram Nair and the incessant spin and word play at comes forth when they want to sell their party position or want to whack WP in Parliament. I have lost whatever remaining shred of respect I had for Tharman after his performance in parliament and the latest exchange between Him and WP Low and Chen yesterday. Tharman was just fixated onscoring partisan points when he kept rebutting them even though they gave sound suggestions on the foreign labour policies which is for the good of the nation. And it is a lesson in dirty politics indeed when we hear how the MIW twist use insidious words to make false accusations such asWP had changed its stance on the foreign workers issues when they have not. When will PAp grow up? they have warned about time wasting on politicking when there is more than one party in parliament. Yet the only people we have witnessed to have wasted precious time in politicking are they themselves the PAP MPs!

  22. 31 Anonymous 6 March 2012 at 14:23

    mebbe the rich already have their insurance to cover any contingencies. factor a worthwhile insurance premium package and the 1k a month to buy flat equation can’t seem to balance.

    Gosh, this is a tough one, roof over family head or medical bills…

  23. 32 Perry 6 March 2012 at 15:41

    Good one Alex! :D

    Perhaps … In a large(ish) political organisation that is needed to pander to a crowd of voices/demands some players are meant to take the heat. No sane politician, much less one with a legal background will go about continuously committing political suicide repeatedly. Could be a tour de force to show that the ruling party is still up for a good political (read as entertainment) fight that is as public as it can get.

    While a democratic system is more ideal then an authoritarian (even a soft one at that) an understanding needs to be developed that the voting populace plays a large part in directing the efforts governance. Once every 5 years or so in the present system. Petty demands notwithstanding.

    I read about Toh Yi Drive and I cringe.

    Keep it up Alex!

  24. 33 K 6 March 2012 at 15:43

    “Hurtful”………Vikram was no doubt resorting to cheap theatrics to score points with his masters


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