04 March 2011

Tharman Shammugaratnam's crowning clown moment

Economic illiterate or discombobulator?

Finance minister Tharman Shammugaratnam (PAP-Jurong) continues to perform his clown routine in parliament as he defends Singapore's budget for 2010.

Possible in light of strong criticism from the blogosphere, the minister admitted that yes, the GST is a regressive tax. However, it seems that is his knowledge of basic economics ends here. Tweaking the rate of the consumption tax will benefit higher income groups and foreigners more, he claims. Yes. That's what Shammugaratnam said -- reducing the rate of the GST will benefit the rich more because the bulk of the GST is collected from them.

Which part of regressive tax does finance minister Tharman Shammugaratnam not understand? Why will he not admit or acknowledge what any introductory econs text states baldly - that a consumption tax makes the poor pay a higher proportion of their income than the rich and that reducing the rate of a regressive tax will make the poor pay a lesser proportion?

Either finance minister Tharman Shammugaratnam is an economic illiterate and should be removed from his post forthwith, or the minister a glib discombobulator who thinks that Singaporean citizens and residents are economic illiterates and should be removed from his post forthwith.

Why Tharman Shammugaratnam will rather clown about than tell you the truth

In 2003, the GST was introduced to gradually replace income taxes, the complicated system of duties and levies, and corporate taxes as the main revenue source for the Singapore government.

The advantages? The global rich will be more likely to make Singapore their home or at least vacation home. Singapore, I suspect, has one of the world's more lenient tax regimes for the rich. Corporate taxes in Singapore are now the lowest in Asia, next to Hong Kong. Having to deal with less duties and levies lessens the red tape that corporations and entrepreneurs have to deal with.

The downside? The progressive tax instruments that existed prior to 1993 have all been dismantled -- progressive income taxes, corporate taxes, and levies and duties to target the rich. Wealth is redistributed from the poor to the rich in Singapore's post-1993 tax system.

Tharman Shammugaratnam and the PAP will go down defending the GST in the short to medium run as a reform of the entire system will take time and planning. They will go down insisting that the regressive tax structure stay in place (and the poor receive strategic state handouts). They will if necessary play dumb on the regressive tax structure because it constitutes the main revenue source of the Singapore government.

They will attempt to tweak the system and preserve the GST for as long as they can, unless the electorate speaks loudly, unless citizens and residents complain loudly and often, unless bloggers continue to expose the PAP's faulty and discombobulating defense of an indefensible regressive tax.

A chief clown for the clown show?

Tharman Shammugaratnam is the finance minister of Singapore. Goh Chok Tong and Lee Hsien Loong were the finance ministers of Singapore before they became prime ministers themselves.

Tharman Shammugaratnam is unfit to be the finance minister of Singapore. He is either economically illiterate, or a glib discombobulator, or an insincere leader who cannot level with Singaporeans. Tharman Shammugaratnam is unfit to be the next prime minister of Singapore.

In the coming general election, I strongly urge the electors to strongly reject Tharman Shammugaratnam (PAP-Jurong) and deprive him of the opportunity to further damage the poor and the middle class.


Fox said...

You may be interested to know that Singapore is still one of the few countries that don't have a comprehensive tax treaty with the US because it refuses to provide tax details of Americans living in Singapore to the IRS.

Anonymous said...

1. Tharman is a member of G30.

2. Tharman is doing a fine job. SG economy is doing very well. check out NATAS fair.

3. Tharman has a boss who is the problem. If you want Tharman to help, help him get a new boss.