Don’t be a sucker for "benefits"

~ By: Leong Sze Hian ~ on March 5, 2012
I refer to the article “Grow economy to forge inclusive society: “DPM” (ST, Mar 2). It stated that over a lifetime, for every $1 of taxes paid, lower-income and middle-income households (no car) get $4.25 and $1.55 in benefits, respectively. I am unable to find any detailed explanation as to how the figures were derived.

“Benefits”: Really

Going by the definition of “benefits”, used in the past, let’s examine what some of them entail. Medisave top-ups – these can only be used for certain medical treatments and medical insurance premiums.  Since medical costs and MediShield insurance premiums keep rising, should Medisave top-ups be considered strictly as benefits since even hospital bills’ arrears may be recovered from such top-ups?

Workfare Income Supplement – since the bulk of these are top-ups to CPF accounts, they may only be a real benefit when one has reached an advanced age after drawing down one’s original own CPF monies.  So, should these also count as benefits?

Rebates on utilities, rental and service and conservancy charges – these may never seem to be able to catch up with the rising charges of such items.

Post-Secondary Education Accounts top-ups – by the time your children reach university age to use these funds, the future increase in tuition fees may have for exceeded the value of these funds.

Subsidies for medical bills – Even with the 80% subsidy on Class C wards, the net payable is still much higher than some of our neighbouring countries like Malaysia.  So, are these really subsidies?  The fact that our public healthcare spending as a percentage of GDP at 1.6% is one of the lowest in the world, compared to the global average of 6% is perhaps the best indicator as to whether these are really “benefits”.

Centre-based infant and childcare subsidies – much of these also may never seem to be able to catch up with the rising fees, for most Singaporeans.

CPF Deferment Bonus and CPF Life Bonus – these are top-ups to those who opt in to the CPL Life scheme – by the time you have drawn down on your own original CPF funds, these may in reality only be received at a very advanced age for most people – late 80s or older.

Property tax rebates – which never seem to be able to catch up with rising property taxes for most people.

HDB housing grants – which never seem to be able to catch up with rising HDB prices.  The fact that the HDB has consistently refused to disclose the break-down of the cost of flats, leaves us with no idea as to how much profits have been made.  So, is this really a “benefit”?

“Benefits” analogy?

Let me use an analogy to illustrate what some of these “benefits” may really mean.

You increase the price by $2, and then say you give a subsidy (benefit) of $1.

Perhaps what would constitute a real benefit would be to not increase the price at all.

You top-up an account with $1, but it can only be used (or most people may most likely only use it) in the future when the price has gone up to $2.

A benefit, here, can be understood as not topping-up the account, and keeping the price same in the future.

The real measure of taxes to benefits?

In the final analysis, perhaps the best measure of taxes vis-a-vis benefits to the people is the statistics as to:

1. How many people are finding it hard to make ends meet?

2. How many cannot pay for their HDB mortgages, medical bills, etc?

When a small country builds up reserves to the tune of an estimated over $500 billion, it may be a clear sign that perhaps its citizens have been over-taxed and “under-benefited”.

By the way, the net Budget surplus over the last seven years was a whopping $10.5 billion!

Author: Gilbert Tan TS

IT expert with more than 20 years experience in Multiple OS, Security, Data & Internet , Interests include AI and Big Data, Internet and multimedia. An experienced Real Estate agent, Insurance agent, and a Futures trader. I am capable of finding any answers in the world you want as long as there are reports available online for me to do my own research to bring you closest to all the unsolved mysteries in this world, because I can find all the paths to the Truth, and what the Future holds. All I need is to observe, test and probe to research on anything I want, what you need to do will take months to achieve, all I need is a few hours.​

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