David Cay Johnston, Reuters columnist and 2001 Pulitzer Prize winner, recently wrote what appears to be a scathing article on "Singapore Tax Myths".  I won’t dare to claim even half his brilliance, but I think some of the sweeping statements and conclusions in his article leave much to be desired.  Examples :

1. He claims that "Government builds… 85% of housing here, giving it vast influence over housing prices", but doesn’t explain how Government controls or otherwise influences prices of resale HDB apartments.

2. He refers to MediaCorp, SingTel and Singapore Airlines as "profitable local monopolies whose profits help hold down income tax rates. But would competitive, independent companies charge less and deliver more".  Perhaps I’m ignorant, but are SingTel and Singapore Airlines monopolies ?  (What then are StarHub and M1,  the 80+ airlines serving Changi International Airport, and Singapore’s open skies policy ?)  And if MediaCorp did not recieve Government funding, would we have free to air TV with some semblance of quality ? (And who would be the poorer as a result of a lack of free to air TV, other than the poor who cannot afford cable TV ?)

3. He claims in regard to the Central Provident Fund that "people do not get a high degree of clarity in disclosure statements because the mandatory savings scheme is not just for retirement, but also for medical care and for the most part housing"  Is there a lack of clarity ? My CPF statement tells me how much goes into which account, for medical care, retirement and ordinary savings (which can be used for housing).

So what is David Cay Johnson’s objection to Singapore, such that he has to make such sweeping and inaccurate statements ?  It is that he — as an American — distrusts big government and taxes. He admits in the final paragraph that he doesn’t like the "idea of government as omnipresent investor [ with ] implicit taxes like those that feed the Singapore government".

Interestingly, he points out that "one indicator of the size of government is the small share of the economy attributable to consumption. In America it is around 70 percent and in much of Asia 60 percent. In Singapore it is around 40 percent with government finance explaining much of the difference".  This means that if the Government of Singapore were not as heavily invested in the local economy, whether as a direct employer of civil servants or indirectly through its company shareholdings, a significant portion of 60% of the Singapore economy could be wiped out or held by foreign investors.  That does not sound very palatable to me.