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Singapore ranked among bottom 10 countries for efforts to reduce inequality: Oxfam report

SINGAPORE — The Republic has been ranked among the bottom 10 countries in the world for its efforts to reduce inequality, according to a global index released on Tuesday (Oct 9).

The Republic has been ranked among the bottom 10 countries in the world for its efforts to reduce inequality, according to a global index released by Oxfam on Tuesday (Oct 9). Oxfam ticked Singapore off for its “relatively low level of public social spending”.

The Republic has been ranked among the bottom 10 countries in the world for its efforts to reduce inequality, according to a global index released by Oxfam on Tuesday (Oct 9). Oxfam ticked Singapore off for its “relatively low level of public social spending”.

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SINGAPORE — The Republic has been ranked among the bottom 10 countries in the world for its efforts to reduce inequality, according to a global index released on Tuesday (Oct 9).

The Commitment to Reducing Inequality Index 2018 showed that Singapore is ranked 149 out of 157 countries, below Bangladesh and above Laos.

It dropped 63 spots from its 86th ranking last year, when the index was first introduced by Oxfam, a United Kingdom-based charity organisation dedicated to improving poverty.

Nigeria is ranked right at the bottom, while Uzbekistan and Haiti are ranked 156th and 155th respectively.

This year's list is topped by Denmark, followed by Germany and Finland, with Japan (ranked 11th) being the only Asian country in the top 15.

'HARMFUL TAX PRACTICES'

According to the report, Singapore's low ranking is due to a number of its "harmful tax practices". Though it has raised personal income tax for the rich by 2 per cent, which took effect in 2016, the maximum personal income tax rate remains very low for the highest earners at 22 per cent.

Oxfam also singled out Singapore and Cayman Islands as territories which encourage corporates and individuals to avoid or evade taxes by having very low tax rates or providing tax havens, while jurisdictions like Switzerland encourage their actions by agreeing to widespread tax exemptions and "sweetheart" deals.

The charity said avoidance and evasion of taxes by corporates and individuals "are costing developing and developed countries alike hundreds of billions of dollars a year".

"Virtually all of this tax avoidance and evasion is undertaken by the wealthiest in society, making the tax system much less progressive," it added.

This is the biggest reason why countries collect far less corporate and personal income tax than they should, the charity said, resulting in sharply reduced revenues that could be used to tackle inequality.

In 2016, Oxfam had named Singapore fifth on a list of the "world's worst tax havens" for its lack of withholding taxes, its range of tax incentives, and evidence of substantial profit shifting.

But the Ministry of Finance defended Singapore’s tax regime and said parts of the Oxfam report were inaccurate, adding that the Republic's tax policies "are designed to support substantive economic activities, in order to create skilled jobs and build new and enduring capabilities in Singapore."

"We do not condone any tax evasion activities or actions aimed at base erosion and profit shifting. Singapore is able to keep the headline corporate tax rate competitive at 17 per cent because we are fiscally prudent and have a diversified tax base,” the Ministry said then. 

RELATIVELY LOW LEVEL OF PUBLIC SOCIAL SPENDING

In its latest inequality index, apart from being rated poorly due to its taxation practices, Oxfam ticked Singapore off for its "relatively low level of public social spending".

With 39 per cent of its budget going towards education, health and social protection, the charity noted this is "way behind" countries such as South Korea and Thailand, where half of their budget are directed towards those areas.

Oxfam noted that while spending on education has risen from an average 14.7 per cent to 14.8 per cent of most government budgets, countries such as Vanuatu and Singapore saw some of the biggest decreases.

According to Singapore's Budget report for 2018, however, the Republic's expenditure in education has risen in the last two years.

Actual expenditure for education in financial year (FY) 2016 was about S$12.4 billion, while the revised expenditure figure for FY 2017 went up to around S$12.6 billion. The estimated expenditure for FY2018 is about S$12.8 billion.

Oxfam also rated Singapore poorly on its labour and gender laws: "On labour, it has no equal pay or non-discrimination laws for women; its laws on both rape and sexual harassment are inadequate; and there is no minimum wage, except for cleaners and security guards."

AMONG THE BOTTOM IN ASEAN

Within South-east Asia, though Singapore is ranked above Laos, it fared poorly compared to its counterparts in the Association of South-East Asian Nations (ASEAN).

Its closest neighbours Malaysia and Indonesia are in the 75th and 90th spots respectively. Meanwhile, Thailand is ranked 74th, the Philippines is in 94th place, Vietnam is in the 99th spot followed by Cambodia in 121st position and Myanmar in 138th place. Brunei is not in the list.

Singapore's poor performance could be due to Oxfam's revised methodology.

Since last year, Oxfam's index is based on three key areas — social spending on health, education and social protection, progressivity of tax policy as well as labour policy.

But this year's index saw additional indicators under the tax and labour areas, covering harmful tax practices as well as women's labour rights and minimum wage.

Oxfam noted that its decision to introduce the harmful tax practices indicator is to address concerns that last year's index did not consider the extent to which a country enables companies to dodge taxes. As a result, certain countries known to be tax havens such as Luxembourg and the Netherlands received higher scores.

Meanwhile, it noted that "working women can sometimes experience greater levels of domestic violence in response to greater economic autonomy", and so, it decided to include an indicator on women's labour rights.

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