I once heard someone say that the government could technically abolish income tax for most people but it doesn't to give them a sense of participation.While I don't know if the story is true, it's easy to see that instead of a sense of participation it gives many (most?) people an excessive sense of entitlement.I keep reading how the government is taking the chicken and giving the wing back, how "taxpayer money" is being wasted left and right, or paid for government propaganda or whatnot.
The reality is that 80% of income taxes and over 60% of GST are paid by Top 10% and Top 20% of wealthiest Singaporeans respectively.These figures are comparable to other countries too. In the US, for example, Top 3% pay 50% of income taxes (Top 20% pay a whopping 85%).
But it's not them who are complaining about the government mismanaging THEIR money, are they? It's the little men, the average ones, the ones complaining how terrible their lives are and who - in reality - contribute a pittance or often nothing at all, if we consider government transfers to help them.Sadly, however, they also constitute a large part of the electorate and their vote is equal to that of a successful CEO giving thousands of jobs.
So, instead of trying to give them a sense of belonging to something they seemingly (but not really) pay taxes to, why not do the opposite?Abolish income taxation altogether for the bottom half of the society (it wouldn't cost much, actually). And raise the GST to 15-20% - but exempt the same group from paying it at the counter. So, again, only above average citizens pay.This would set the balance straight - you don't contribute, you depend on others paying their taxes, so keep it shut.I think that, paradoxically, it could also result in added motivation to join the tax-paying group, as it would create two classes of citizens - and who wants to be recognized as a freeloader?
It seems that no matter how much the government wants to subsidize the low income earners, people will only focus on the negatives. How many people care about the support packages, if they can't even calculate if they are better or worse off?And populists have a field day, convincing thousands that they are being ripped off, when in reality their lives are bankrolled by the wealthy elite they should be grateful to.
I believe there should be clarity about who really contributes and by letting some people pay even a tiny bit of tax the system creates enormous entitlement in them.
A more reasonable approach might be that if you don't pay, you don't get to talk. And then give people a choice - either they contribute and can have a voice, or they get carried by the other half and so should quit their caterwauling.
