Tuesday, February 02, 2010

Social services and taxation

The citizens of a country have to decide on the types of social services to be provided by its elected government and how the cost of these services should be paid for. In some countries, the government provides generous social services, such as old age pension, unemployment benefit, health care, education, and collects high taxation to fund them. In other countries, the government has a low rate of tax and provides minimal services, leaving the people to pay for these services in the private market.

There are various ways of collecting tax to pay for the social services and other cost of government. The most popular form is income tax (on earned and investment income) and levies but an increasing portion is now through consumption tax (such as Goods and Services Tax).

Many countries provide generous benefits but collect insufficient taxes to pay for these benefits, leading to a budget deficit. Some countries collect a lot of tax but provide low benefits, leading to a huge budget surplus (such as Singapore).

What are your views on social benefits and taxation? Give your views in this survey.


Anonymous said...

It depends on whether the political and economic system in the country allow for those taxes.

For instance, When Britain introduced the GST years ago, riots were erupted.

Some also said GST is not suitable for 3rd world countries.

In some countries, the govt can do what they want, not just GST, and they still can remain politically strong. So of course they do what they want and citizens may not benefit compare to elsewhere.

So it really depends.

Gideon said...

Hi Mr Tan,

I am curious, as to why you feel Singapore collects a lot of taxes. Living in the US, it seems that Singapore has a much lower income and sales tax than almost everywhere else.


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