Mentom - Singapore 2012

© Mentom – May 2012


Where does the money come from?

Sunday 31 January 2010, by Mentom

All the versions of this article:

  • English

Yesterday was a packed day : I showed around a friend who came for the first time to Singapore. In the morning we went for a small hike in the MacRitchie reservoir, watching animals and birds, and just enjoying the sounds of the forest and greenery.

After a while, the discussion came (as often) to the point, how Singapore can function so well. In particular, having low income taxes, my friend asked, where does the money come from? I thought to myself "good question"; actually I realized I had never thought about this question.

So, this Sunday morning I sat down and tried to figure out the Singapore government expenses and revenues for the past year. In the end, the "quick check" became a two hours intriguing browsing through documents and I want to share some of my findings.

Firstly, amazing enough, Singapore maintains a web site called Singapore Budget explaining how the budget is planned and giving all the figures in downloadable PDF’s. For example, you can get the figures for 2009 here

Second, I stumbled over a website containing a game "If I were the Finance Minister", where you could, simplified, try to modify some of the budget parameters and see their implications.

Firstly, the revenues. The bulk is income tax revenue, but you can also see some important items, especially import-export taxes, vehicle taxes (in Singapore, you have to pay the government for the right to own a car!); and finally gambling taxes.

Compared to other countries, the taxes are still low. Look at the Netherlands for example!

In comparison to Germany, the tax percentage is progressive, and goes from 0% to 45% taxation for income tax. But way higher then in Singapore: to pay 20% tax in Germany you will need to earn less then 30,000 Euro per year.

Now let’s have a look at the expenses. 42% is "social" with about 23% invested in education and about 7% for healtcare. I compared to the German budget for 2009 : about 3% of the budget goes to education and only 1% in healthcare.

About another 42% is "defense" : including inner security, police forces etc. Quite a consequent amount of money for such a small country although it seems to be a bigger concern of all countries: Germany spends about 10% of it’s money in defense.

Finally, most of the rest goes to economic development.

Let’s now have a look at Germany’s budget for 2009:

These are the big chunks, and the amounts are below together with the translation.

You can see that out of 290 Mrd. Euro, we are paying an amazing 42 Mrd. Euro just for interest - basically the debt we contracted earlier!

And finally, some of the smaller portions.

Voila!

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