Singapore, Taxes, and unemployment

[PainRack]

Let's all be frank here. The CPF is the slush fund used to paper over Temasek's tragilarious "investments", as overseen by Ho Ching.

Considering that Temasek has a public record accessible to investment experts and international auditors, highly unlikely. I vote GIC. Sure, CPF funds are supposed to be used by GIC in the first place, but we can't tell whether profits/losses are being covered up.

Not true for the last few years. CPF loans do cover part of the costs, but you still have a huge bill to pay over the next decade with bank loans. Whereas MAS is probably stricter than the Federal Bank in the US, it doesn't change the fact that people are taking huge risks with huge loans and it doesn't take much effort for the local economy to go downhill when someone sneezes, even literally speaking.

Evidence that the majority of people pay a large component of HDB flats with non HDB loans? That's literally bucking the trend.
Secondly, MAS has absolutely nothing to do with this. Citibank just wrote off 25 billion dollars in bad debt as it is.
Thirdly, subprime crisis occurs when bad debt occurs and it can't be paid off. The property market here is still viable enough that debt recovery is still possible.
Lastly, considering the international exposure of the banks involved and the pitiful small scale of Singapore market, you must be joking if you think that any form of economic depression would cause a crisis for banking.

You must be joking if you think that a mere 660 square kilometers of land possess sufficient economic value that bad debt recovery will cause a banking crisis.

Let me restate this: I do not see the logic of extending the withdrawal age limit because of the paltry returns. By that age, one has more time to do investments and so forth which reap far better returns than the pathetic interest rate, which is worse than even the savings account I have now in the US. Further, the older one gets, the larger the medical bills and thus one needs more money. Putting more money in a pathetic fund isn't going to increase the nest egg.

Ah, I see what you're attempting to say. Unfortunately, you're wrong.
The extension of the withdrawal limit ensures that there's still money left in the Ordinary Account, money which goes towards Medisave/Shield payments on top of other expenses. That's the key reason why the extension was enacted.
If you withdraw that money and put it in a savings linked program, you're not going to be able to use it to pay medical bills. Medical insurance programs such as Prushield already use CPF contributions as it is and you get a better rate.

I have been told by friends etc. that unit trusts are the worst possible place to put funds in and there are much better funds with much better guaranteed returns. One needs to however, have sufficient funds to divert them to these managed funds. Of course, one could cynically construe this irritating lack of flexibility as the Govt's attempt to dissuade people from using CPF for anything.

Such as? REITs and the like are actually one of the few investment funds which do give higher returns and are viable for CPF investments. Other higher returns units such as futures and derivatives are considered to be more risky and thus off limits to CPF investment.
Or have you forgotten that you can invest your own CPF money?

For your information, the domestic economy has, until quite recently due to the sudden jump in the economy which I doubt is sustainable since all things are cyclical, been in the doldrums. Retail sales were weak, and

It has a same effect as a tax. Deal with it. Tax takes away money that people can use. So does CPF. You can use it on housing and a few other things, but daily necessities, no. And housing is still a huge bill compared to housing in the West. This is not steam, this is economics.

And all these are basic economic realities... May I remind you that up to 30% of the Singaporean population don't pay income tax at all? The tax structure for living with your parents and other dependents means you can hope to earn an monthly income of 2k, and even higher if you have kids without paying tax.
For the majority of Singaporeans, taxation comes from consumption taxes.
I'm just wondering, what IS the point? That 20% mandatory savings= reduced consumption? No shit. That's the whole point of MANDATORY savings.
Or are you attempting to state that the weak domestic market is responsible for the poor economic performance?
Considering that our entire economy is export orientated, that's literally bull.You can argue like one economist did almost a decade back that we should be developing our own domestic market but that's an entirely new issue altogether. I for one do NOT want a 6 million population.

At a pathetic fixed rate of return. And welfare services are largely out of reach of the middle class which forms the bulk of the population.

Are you even aware of what welfare services are available?
MSW is the only free medical services available in the hospitals.
FSCs don't do means testing and are available for all.

Private services also rely largely on government aid.
Nursing homes, rehab and etc are funded out of Community Chest and government dollar for dollar programmes. Non-for profit organisation fees are meant to recover expenses only and thus rely heavily on government linked charity, such as Community Chest for survival. Not to mention reduced utility rates and etc. NKF makes a big deal about how private donations are required to sustain charitable organisations, but that ignores how Community Chest is a form of government susbsidy.
Social enterprises aren't really welfare, but they do enjoy subsidies and grants so that they can get started, providing jobs for the disabled and other social projects.
Comcare just shows how much the government has a stake in social welfare services. It doesn't set them up directly, but it provides the network and the intergration that makes them work well. Hell, Mendaki is so closely affliated with the government(for better or for worse) that it can't really function outside of it.

None of these are "outside" the reach of the middle class so as to say. You're looking too deeply into the limited offset schemes, work schemes and funds that target directly the poor. Welfare services to handle other aspects of daily life are usually privatised under the aegis of the government.

[The_Nice_Guy]

Unfortunately, Ordinary Account only allows "restricted" investment in various funds. And since you can't draw upon it, you can't rely on this for an emergency. Its just.......

Exactly. So why CPF? I'd rather we get the money to use as we want. A good reason would be that mentioned: labour cost manipulation by the state to control employment rates.

At best, Ordinary and Special accounts can only be relied upon to provide the equivalent of a savings insurance program. You put in cash every month, at the age of 55 you get the equivalent of a lump sum payment and then an annunity for the rest of your life(well, that's now. Previously, it was an annunity for as long as your remainding cash holds out...... which actually worse off since the annunity is utterly incapable of even providing adequate nutrition, much less other costs of living)

Again, exactly my thoughts. It's not enough even for food. And when you count in medical costs... ouch.

The movement towards linking insurance savings programmes to CPF is frankly the ONLY part of the latest CPF change that makes sense. Use money that people are forced to save to invest in savings.

That said, nobody is being forced to use their CPF to invest. Kinda a mistake, but I can't hardly argue for the guvmint to interfere even more when it's heavy hand is already so apparent, can I?

I would actually argue that we do need mandatory savings...... for medical bills. The alternative is to shift it to a socialised system similar to NHS.
Frankly,for the purpose of limiting consumption, I rather co-payment be based upon components of medical bills, rather than being a portion of the entire bill.

I agree with the medical part. A possible sidestep is a mandatory medical insurance service to spread the risks, because spiraling medical costs means that most people would not be able to afford their bills even with years of medical savings behind them.

I would actually recommend this one, with the guvmint or employers footing part of the contribution, with some caveats: smokers and people involved in certain ahem... risky behaviours have to pay a higher premium on their own.

Of course, this might also mean that a huge amount of the risks(costs) falls upon the younger generation(namely, us), but it's not like we're going to avoid paying for it in one way or another anyway.

The OP premise is utterly flawed. It assumes the penalty for taxation is loss of income for the government, that's not true in Singapore case.The tax cut doesn't pay for itself at all since there is no revenue loss whatsoever. What it does is simply reduce costs by reducing wage costs. A forced wage cut to say, as opposed to one that works through the free market.

Actually, I wasn't referring to the taxation part(missed it completely, doh!), but the part that I did thought was the central thrust of the argument was a faster state response to changing labour conditions by manipulating wages across the board. Yeah, not exactly taxation, more like manipulating labour costs directly.

The only reason why the Singapore government keeps harping about Confucius is simply because it desires the elderly to be taken care of by their children. In no other aspect of our society is it Confucian in nature. I don't see us advocating a liberal criminal/prison policy, do you?

That part of the guvmint's message is BS. Like, young folks taking care of their older folks isn't Confucian; it's humane. Many, many other human cultures and societies do the same. Why can't we simply encourage such behaviour by emphasizing humanism?

I'm paying for my dad's medical insurance. Crossing my fingers and hoping it's enough when(not if) something hits. Medical technology has given us the curious conundrum of living long enough to suffer a lot more ailments...

[Xisiqomelir]

Let's all be frank here. The CPF is the slush fund used to paper over Temasek's tragilarious "investments", as overseen by Ho Ching.

Considering that Temasek has a public record accessible to investment experts and international auditors, highly unlikely. I vote GIC. Sure, CPF funds are supposed to be used by GIC in the first place, but we can't tell whether profits/losses are being covered up.

Uhh, that's not a public record. A public record would be accessible by John Q. Tan, and then John Q. Tan would see that X dollars and Y cents are in each of the various shell companies owned by the extended Lee clan (+ retainers). Instead, you get joke "portfolios" like this one on the Temasek page. Transparent as mud.

[Fingolfin_Noldor]

Considering that Temasek has a public record accessible to investment experts and international auditors, highly unlikely. I vote GIC. Sure, CPF funds are supposed to be used by GIC in the first place, but we can't tell whether profits/losses are being covered up.

I trust you don't seriously think the so-called figures are in any way 100% accurate, and the government isn't trying to pull an Enron on us which isn't quite beyond them.

Evidence that the majority of people pay a large component of HDB flats with non HDB loans? That's literally bucking the trend.

As it stands, any family with total earnings exceeding SGD$8000 is not eligible for HDB loans. So unless I am mistaken about this, or wage rises haven't been as great as the Government has been claiming, likely quite a large portion of people aren't eligible for HDB loans especially when these days both husband and wife bring home the dole.

Secondly, MAS has absolutely nothing to do with this. Citibank just wrote off 25 billion dollars in bad debt as it is.

You do realise that MAS does regulate the loan market and many financial sector related markets. And I fail to see how Citibank even features in this too since I hardly mentioned anything about the US Market beyond saying that MAS is stricter compared to the Fed bank.

Thirdly, subprime crisis occurs when bad debt occurs and it can't be paid off. The property market here is still viable enough that debt recovery is still possible.

As I have said once or twice, the crises in question is more to do with people losing their homes and not the banks going under. Considering that the banks here do not solely base their operations on housing loans, unlike some banks in the US, I do not expect them to go under unless something really screws everything. The Govt will probably come to the rescue especially considering DBS is a Govt holding.

Lastly, considering the international exposure of the banks involved and the pitiful small scale of Singapore market, you must be joking if you think that any form of economic depression would cause a crisis for banking.

You must be joking if you think that a mere 660 square kilometers of land possess sufficient economic value that bad debt recovery will cause a banking crisis.

Unless I am mistaken, the banking sector suffered a fair bit in the late 80s, late 70s and the late 90s recession. So unless history is to be not a judge, the banks will suffer when few people put money in their coffers and few take loans and liquidity thus not fluid.

And the last economic crises in 1997 was a result of banks in Thailand and Indonesia being unable to recover loans and had to default a lot of them. When the SGD plunges, you will face the same problem. Do not bet on it not happening.

Ah, I see what you're attempting to say. Unfortunately, you're wrong. The extension of the withdrawal limit ensures that there's still money left in the Ordinary Account, money which goes towards Medisave/Shield payments on top of other expenses. That's the key reason why the extension was enacted.
If you withdraw that money and put it in a savings linked program, you're not going to be able to use it to pay medical bills. Medical insurance programs such as Prushield already use CPF contributions as it is and you get a better rate.

I am sitting on a savings account at HSBC in the US that gives me 4.5% interest rate. THere are funds that one can invest in that gives similar returns if one bothers to find them.

Such as? REITs and the like are actually one of the few investment funds which do give higher returns and are viable for CPF investments. Other higher returns units such as futures and derivatives are considered to be more risky and thus off limits to CPF investment.
Or have you forgotten that you can invest your own CPF money?

There are investment funds with minimum guaranteed returns. The fund guarantees it. Go and look.

And all these are basic economic realities... May I remind you that up to 30% of the Singaporean population don't pay income tax at all? The tax structure for living with your parents and other dependents means you can hope to earn an monthly income of 2k, and even higher if you have kids without paying tax.
For the majority of Singaporeans, taxation comes from consumption taxes.
I'm just wondering, what IS the point? That 20% mandatory savings= reduced consumption? No shit. That's the whole point of MANDATORY savings.

The point being that low income tax is deceptive. Everyone pays taxes aside from the GST. The word "savings" is just a way to cover up the fact that the Govt doesn't want to be obligated to give you anything when you retire.

Or are you attempting to state that the weak domestic market is responsible for the poor economic performance?

No, I did not state that. I am only concentrating on the fact that there exists a weak domestic market, precluding exports.

You can argue like one economist did almost a decade back that we should be developing our own domestic market but that's an entirely new issue altogether. I for one do NOT want a 6 million population.

Considering the no. of foreigners and the fact that they are simply giving out PRs like red packets, do not be surprised if we hit 6million in 2-3 years. Foreigners contribute more tax monies anyway with their higher expenditure. That was the Govt's own projections, which is quite believable.

A domestic market does not need a huge market mind you. What you need is lots of indigenous industries, instead of having the whole of them supplanted by MNCs. We will, for example, never have a silicon valley like Israel's simply because MNCs simply outclass anything and no one has the means to grow fast enough to survive. Doesn't help that the Govt has a bias for all things foreign, even Singaporeans who came back from abroad.

Are you even aware of what welfare services are available?
MSW is the only free medical services available in the hospitals.
FSCs don't do means testing and are available for all.

Private services also rely largely on government aid.
Nursing homes, rehab and etc are funded out of Community Chest and government dollar for dollar programmes. Non-for profit organisation fees are meant to recover expenses only and thus rely heavily on government linked charity, such as Community Chest for survival. Not to mention reduced utility rates and etc. NKF makes a big deal about how private donations are required to sustain charitable organisations, but that ignores how Community Chest is a form of government susbsidy.
Social enterprises aren't really welfare, but they do enjoy subsidies and grants so that they can get started, providing jobs for the disabled and other social projects.
Comcare just shows how much the government has a stake in social welfare services. It doesn't set them up directly, but it provides the network and the intergration that makes them work well. Hell, Mendaki is so closely affliated with the government(for better or for worse) that it can't really function outside of it.

None of these are "outside" the reach of the middle class so as to say. You're looking too deeply into the limited offset schemes, work schemes and funds that target directly the poor. Welfare services to handle other aspects of daily life are usually privatised under the aegis of the government.

NKF I believe has some regulations on who gets aid and how much. I am not too sure about the details but these are definitely not altogether available to everyone. Most welfare services do not cater to all income brackets simply because they do not even have the funds to cater to all but only the needy. We aren't technically a "welfare state" for a good reason.

[PainRack]

As it stands, any family with total earnings exceeding SGD$8000 is not eligible for HDB loans. So unless I am mistaken about this, or wage rises haven't been as great as the Government has been claiming, likely quite a large portion of people aren't eligible for HDB loans especially when these days both husband and wife bring home the dole.

The average family take home pay is 4000-6000.(Depending on dual income vs single income) And people who do earn more than that don't need to rely on home loans, they can rely on CPF contributions to pay.

You do realise that MAS does regulate the loan market and many financial sector related markets. And I fail to see how Citibank even features in this too since I hardly mentioned anything about the US Market beyond saying that MAS is stricter compared to the Fed bank.

Because MAS doesn't directly regulate how much exposure banks get to derivatives. If that was so, you think Barings would had fallen?
To put it simply, the only thing MAS can do is ensure that banks have sufficient reserves to meet potential losses in derivatives. It does not have the power to prevent banks from having severe losses from derivatives, and the subsequent loss in confidence that leads to.

As I have said once or twice, the crises in question is more to do with people losing their homes and not the banks going under.

That's not a subprime crisis. That's a housing issue. Interestingly, there are actually HDB mechanics to help protect your house. You can't mortgage your home for example until you have paid up a certain percentage of the home value.

Unless I am mistaken, the banking sector suffered a fair bit in the late 80s, late 70s and the late 90s recession. So unless history is to be not a judge, the banks will suffer when few people put money in their coffers and few take loans and liquidity thus not fluid.

From stocks, business loans and other economic sectors. Not the property market. If that was so, we would had seen banks suffering a severe shock during the late 90s when the property market was depressed. Hell, the contracter business has been in the doldrums since the 80s.

And the last economic crises in 1997 was a result of banks in Thailand and Indonesia being unable to recover loans and had to default a lot of them. When the SGD plunges, you will face the same problem. Do not bet on it not happening.

And based on totally different economic factors. More importantly, the issue for indonesia and Thailand rest in the fact that materials, loans were negotiated in US dollars and built on top of a property bubble. That's not the case here.

I am sitting on a savings account at HSBC in the US that gives me 4.5% interest rate. THere are funds that one can invest in that gives similar returns if one bothers to find them.

And most funds don't give you the flexibility to withdraw them to pay for emergencies. That's the whole point. Furthermore, money put into investment at the age of 55, relying on short term savings usually yield very low rates of return with little flexibility.

There are investment funds with minimum guaranteed returns. The fund guarantees it. Go and look.

And how does that change the point that you ARE allowed to invest with your CPF money?

The point being that low income tax is deceptive. Everyone pays taxes aside from the GST. The word "savings" is just a way to cover up the fact that the Govt doesn't want to be obligated to give you anything when you retire.

And I'm forced to use the word. So? 20% of income gone is relatively neglible compared to the amount other people pay in income tax.Using the US taxation as an example, the average Singaporean will be expected to pay 15% or 25% of his income to the Federal government as tax.

No, I did not state that. I am only concentrating on the fact that there exists a weak domestic market, precluding exports.

Yes. A 4 million population that has open markets towards imports does that.

Considering the no. of foreigners and the fact that they are simply giving out PRs like red packets, do not be surprised if we hit 6million in 2-3 years. Foreigners contribute more tax monies anyway with their higher expenditure. That was the Govt's own projections, which is quite believable.

No, they don't. The majority of the population increase has been in Indian and Chinese immigrants.

A domestic market does not need a huge market mind you. What you need is lots of indigenous industries, instead of having the whole of them supplanted by MNCs. We will, for example, never have a silicon valley like Israel's simply because MNCs simply outclass anything and no one has the means to grow fast enough to survive. Doesn't help that the Govt has a bias for all things foreign, even Singaporeans who came back from abroad.

Utter nonsense. The fact that our umbrella, furniture and even biscuit industry has mostly went under shows that its not about quantity. Its about quality and the ability to peg into a larger market, such as how Axe brand oil, Tong Kuan biscuit has done. Yeo drinks in particular has faced huge success in increasing its international exposure.

NKF I believe has some regulations on who gets aid and how much. I am not too sure about the details but these are definitely not altogether available to everyone. Most welfare services do not cater to all income brackets simply because they do not even have the funds to cater to all but only the needy. We aren't technically a "welfare state" for a good reason.

And? There is no state in the world that doesn't limit welfare consumption and thus exposes the middle class to more risk. You attempted to claim that services cater primarily to the poor and isn't accessible to the middle class. Its categorically wrong.
There is a plethora of services available. The issue right now is more of capacity.
Singapore practices the inverted pyramid scheme, the burden for revenue falls on the top(which will include the middle class) and the majority of the distribution will fall on the bottom.
Rising costs and living standards are squeezing the middle class dry, especially as healthcare consumption rises, but that's demographics.

[Fingolfin_Noldor]

Because MAS doesn't directly regulate how much exposure banks get to derivatives. If that was so, you think Barings would had fallen?
To put it simply, the only thing MAS can do is ensure that banks have sufficient reserves to meet potential losses in derivatives. It does not have the power to prevent banks from having severe losses from derivatives, and the subsequent loss in confidence that leads to.

As I have said once or twice, the crises in question is more to do with people losing their homes and not the banks going under.

That's not a subprime crisis. That's a housing issue. Interestingly, there are actually HDB mechanics to help protect your house. You can't mortgage your home for example until you have paid up a certain percentage of the home value.

There are technically HDB mechanics (in theory the only repossessor is the HDB and not banks since HDB flats are Govt property. However, I am not too clear about how HDB deals with loan defaulters since stories of these are rarely, if ever reported). But that simply postpones the inevitable, and I wonder if the Govt would like to give more burdens than it needs to in the event a lot of people default on loans.

MAS does a fair bit when it comes to loans. For example, it set regulations for credit cards and for a time they relaxed, and tightened then relaxed the issuing of debit card. They can't deal with exposure, since it's not their perogative to deal with bad business decisions but they certainly can't allow banks to take advantage of idiocy and plunge the country as a whole into chaos which is what happened in the US.

From stocks, business loans and other economic sectors. Not the property market. If that was so, we would had seen banks suffering a severe shock during the late 90s when the property market was depressed. Hell, the contracter business has been in the doldrums since the 80s.

That's because back then HDB dominated the housing loans since it was prime issuer. I am not sure if the property market has returned to bubble stage, but as with all things, something has got to give....

And based on totally different economic factors. More importantly, the issue for indonesia and Thailand rest in the fact that materials, loans were negotiated in US dollars and built on top of a property bubble. That's not the case here.

Alright. But local companies deal a fair bit in foreign sales which are in USD and other currencies. So there is exposure, given how export oriented our economy is. Companies like SIA suffer a fair bit actually when the greenback is weak. Airbus is having that problem now with a strong Euro vs weak greenback.

And most funds don't give you the flexibility to withdraw them to pay for emergencies. That's the whole point. Furthermore, money put into investment at the age of 55, relying on short term savings usually yield very low rates of return with little flexibility.

Eh? A lot of investment funds allow you to withdraw as you like. I have yet to hear of such rules, otherwise, the term "capital flight" would not have existed.

Because MAS doesn't directly regulate how much exposure banks get to derivatives. If that was so, you think Barings would had fallen?
To put it simply, the only thing MAS can do is ensure that banks have sufficient reserves to meet potential losses in derivatives. It does not have the power to prevent banks from having severe losses from derivatives, and the subsequent loss in confidence that leads to.

As I said, MAS does more than that.

And how does that change the point that you ARE allowed to invest with your CPF money?

And these investment funds are even found on the approved list? Doesn't that make your point even moot?

And I'm forced to use the word. So? 20% of income gone is relatively neglible compared to the amount other people pay in income tax.Using the US taxation as an example, the average Singaporean will be expected to pay 15% or 25% of his income to the Federal government as tax.

First you make a bee hive over the fact I described the CPF as a tax, and now you reply with indifference. Either you aren't thinking when you write, or you are just jumping at every time I criticise the Govt for something, displaying the usual inferiority complex that every damn idiot on the street has when someone criticises the country or the Government, both of which seems to be a blur to these idiots.

Yes. A 4 million population that has open markets towards imports does that.

More than just that actually. The Govt hardly made an effort to help nurture local SMEs until fairly recently. Quite frankly, it's too little too late when foreign MNCs are quite well entrenched.

No, they don't. The majority of the population increase has been in Indian and Chinese immigrants.

Yes and no. A fair no. of these people work in relatively high skill jobs. People having been grumbling about foreign workers taking up high skill jobs and leaving Singaporeans out (to say nothing of the apparent bias for foreigners or girls with regard to NS requirements) Do you honestly think boutique shops like Gap can appear in Singapore and hope to survive on the bulk on the population? Bearing in mind that clothing there carries as much as a 100% premium over foreign prices? Moreover, the Govt's apparently intention to give out lots scholarships to Chinese students is in hope that 1 in 5 would even stay here and take up jobs.

Utter nonsense. The fact that our umbrella, furniture and even biscuit industry has mostly went under shows that its not about quantity. Its about quality and the ability to peg into a larger market, such as how Axe brand oil, Tong Kuan biscuit has done. Yeo drinks in particular has faced huge success in increasing its international exposure.

Who the fuck cares about these industries you speak of? These are for fucking third world countries to care about since that is considered high tech to them and they hardly bring in much. I am talking about high tech industries like software industries which we have near zero. We have none of these because the fucking Govt never attempts to help nurture them. Will we even ever match Israel's tech industry? Never. Mind you, Israel for example faces more challenges than us as a society and even with the considerable US military aid, they still managed to wring together a fairly sizable indigenous tech industry. Internet Relay Chat anyone?

And? There is no state in the world that doesn't limit welfare consumption and thus exposes the middle class to more risk.

I hope you haven't forgotten that welfare states in Scandinavia offer practically free health care and though they have had occasional hiccups or wars over the last century, they are doing quite well.

You attempted to claim that services cater primarily to the poor and isn't accessible to the middle class. Its categorically wrong.
There is a plethora of services available. The issue right now is more of capacity.

On one hand you say available, on the other you talk about capacity. Make up your bloody mind. Ditch the theory, can the middle class in practice get access to many of these so called welfare services? I know NKF does not give them to everyone, and includes certain segments of the middle class earning above a certain income bracket. They have turned people away and that was part of the criticism leveled at it when it was learnt they had a fat reserve.

Singapore practices the inverted pyramid scheme, the burden for revenue falls on the top(which will include the middle class) and the majority of the distribution will fall on the bottom.
Rising costs and living standards are squeezing the middle class dry, especially as healthcare consumption rises, but that's demographics.

Nothing new. Practically most western countries practice that.