Singapore's Gini Co-efficient after Government Taxes and Transfers vis-a-vis Other Major Developed Economies in Last Five Years
Ministry of FinanceSpeakers
Summary
This question concerns the comparison of Singapore’s Gini coefficient after taxes and transfers with other major developed economies, as raised by Mr Leon Perera. Minister for Finance Heng Swee Keat explained that while Singapore’s pre-tax Gini is low, some countries achieve lower post-tax figures by imposing higher taxes on the middle-income to fund large social transfers. He emphasized that Singapore’s strategy maintains a low tax burden with targeted support for the lower-income, rather than broad-based high taxation. Additionally, the Minister for Finance noted that standard international metrics do not account for unique interventions like significant HDB housing subsidies. Consequently, the government utilizes the OECD’s square root scale to provide a comparative context for Singapore’s fiscal and social policy outcomes.
Transcript
8 Mr Leon Perera asked the Minister for Finance how Singapore's Gini coefficient after Government taxes and transfers in each of the last five years compares to the Gini coefficient after taxes and transfers for other major developed economies, such as Japan, South Korea, the USA, the UK, France, Germany, Canada, Sweden, Norway and Denmark.
Mr Heng Swee Keat: There are different methodologies used internationally for calculating the Gini coefficient. Singapore's Gini coefficient is typically reported based on household income from work per household member. The calculation by the Organisation for Economic Co-operation and Development (OECD) is based on the Square Root Scale1.
If we apply the OECD method to ourselves, then based on data from the latest available year, the Gini coefficients for Singapore and some major economies are shown in Chart 1.
Before taxes and transfers, Singapore’s Gini coefficient is low compared to many major developed economies.
After taxes and transfers, several countries have a lower Gini coefficient compared to Singapore. This is because they typically impose higher overall taxes on the working population and, in particular, on the middle-income, in order to finance large social transfers. In contrast, Singapore's approach is to keep our tax burden low and provide targeted support for the lower-income.
In addition, these calculations do not reflect the full range of Government policy interventions that are unique to the Singapore context. For example, many Singaporeans enjoy significant subsidies for the purchase of HDB flats, which have helped them own homes in a high-quality living environment.
Chart 1 International comparison of Gini coefficients based on the square root scale (latest available year)2
