FT's (Foreign Talent) view on 2% GST increment

Nov 16, 2006
From Mika Sampovaara who left welfare state to come to Singapore

"I WOULD like to commend Prime Minister Lee Hsien Loong for sticking to the Singaporean economic model. I read with interest his views regarding Scandinavian welfare states. I am from one of them: Finland. While it is true that there is more 'welfare' in Scandinavia, it comes at a price. Public spending in my country stands at 25 per cent of GDP, twice that of Singapore. The government in Finland spends vast amounts of money on free health care and education, nearly twice the 8 per cent of GDP spent in Singapore. Having been to Changi hospital I can say that health care here is no worse than in my country and the charges are very reasonable. My point is it doesn't have to be free. It's a question of choice and pricing. The public sector typically does not run the most efficient services, because the services are non-competitive. Singapore runs a tighter ship, because it's only partially subsidised. Compulsory savings schemes for health care and pensions are a far better way. So is taxing consumption over income. Many people in my country give up half or more of their gross incomes to finance the almighty welfare state. This serves to promote equality of sorts and creates a vast middle class. It also stifles entrepreneurism and leads to voluntary unemployment. The cost of living is higher too, with GST at 22 per cent. I disagreed with the crushing taxes in my country. It is for this reason that I came to Singapore, and was happy to give up the benefits I had paid for over the years. Long live the Singaporean model."

(Picture courtesy of TheoDR, Hardwarezone)