It's My Life

Analysis on Canada vs Singapore, again (Day 94 in Vancouver)

Out of curiosity I checked out the income taxes for both Singapore and Canada in 2007. Based on an income of $120,000, a Singaporean pays tax of 8.25% only, while his Canadian counterpart will pay nearly 30%.

All calculations here are done in the respective countries’ currency (no conversion made).

That’s the reason why high income earners love Singapore.

Well, let’s go deeper into analysis before making a judgment.

A recently graduated software engineer in Singapore can expect to earn about S$2,500 to S$3,000 (if really lucky, and excluding employer CPF contribution). Based on a median of $2,750, that will be an annual salary of $33,000. With bonuses (of approximately 2 months), that will go up to S$38,500. Based on this, income after tax will be nearly $37,700 (2007 effective tax rate of 2.12%). That’s before CPF of course.

The same person in Canada can expect to earn a median salary of 58,276 CAD with bonuses included. After tax, that goes down to 45,987 CAD (2007 effective tax rate of 21.09%).

Singapore has a GST of 5% levied on all purchases, while for Vancouver GST of 5% plus PST of 7% for a total of 12%. However, in BC (not sure for other provinces) food items are tax exempt. So let’s simplify matters and assume that sales tax in Singapore and Vancouver for the average person come down to roughly the same amount eventually.

In terms of healthcare, Singapore does not provide public healthcare insurance, but instead has the optional Medishield program for hospitalization benefits (with deductibles – it is important to note that Medishield does not provide 100% coverage – one would still expect to pay perhaps at least 20 to 30% +++ of the bill depending on certain variables). It’s also important to note that Medishield premiums while low, go up with age, and that it doesn’t cover outpatient treatments. Premiums start at $30 per annum for a young individual, to $700+ for seniors (which makes sense from the insurer’s point of view that the risk for a senior is higher, but does not make any sense from a retiree’s point of view when he has no income but is still expected to pay such high premiums).

In BC, all residents are covered by MSP, which costs $108 a month for a family of 3 or more. Assuming a family size of 4, that would cost $22 a month per individual, or $264 per annum. This covers practically all healthcare needs (including pregnancy and deliveries, I think), with the exception of non-medically required items such as cosmetic surgery and medical examinations for driver’s license, etc. Low income earners can also expect subsidies on these premiums – up to a 100% subsidy for really poor people.

Now, looking at both countries, I believe Canada gives a better deal on healthcare – especially when considering a lifetime worth of healthcare needs – pregnancy, children’s needs, chronic illness, acute care, outpatient care, etc.

Undisputedly, Singapore wins hands down on the lower cost of food and other basic shopping needs. However, I believe that to be primarily a result of no minimum wage requirement – which sucks. No minimum wage benefits high income earners more than lower income earners because the former stand to save more (as they spend more). While lower income earners bear the brunt of this by earning as little as $3 an hour at Macdonald’s (not sure if its gone up already).

Utilities rates (including water, sewage, garbage, recycling, drainage services, etc) costs about $900 per annum in Vancouver per household. Singaporeans pay about $50/month ($600 per annum) for a four-room HDB flat for utilities, excluding water. Water and electricity in Singapore (say for my 4-room flat), costs about $150 ($1,800 per annum). Electricity charges in Singapore are appalling, at 23.88 cents / kWh as at April 2008. This compares to Vancouver’s 6.775 cents… about 3.5 times higher. Assuming a usage rate of about 400 kWh per month, that would cost about $27 a month ($324 per annum). Total for Singapore (water, utilities, electricity) is about S$2,400, while in Vancouver is about $1,200 CAD. That’s about double!

Now, I am sure people will come commenting about how water is expensive in Singapore because we have no natural resources, etc. I do not dispute that, but we are now concerned about cost and it would be out of context to talk about such issues here.

Now, let’s take in account purchase of a vehicle. In Singapore, one can expect to pay about 150% (If I am not wrong) excise duty on imported vehicles (all our vehicles are imported anyway). Let’s not go into specifics, but a Honda Civic in Singapore will cost about $70,000… while the same car costs about $17,000 CAD here. Even after adjusting for currency differences, that’s still more than double! And putting this into perspective – the price premium one pays for a car in Singapore would effectively pay for a couple years worth of income taxes in Canada. Also, add to that the cost of road tax, ERP (toll), etc.

In terms of housing, while Singapore has lower-priced public housing (HDB) available, the cost of a private apartment or house is comparable to that in Canada.

Putting all these together (I am aware there are probably lots of other tangible and non-tangible considerations as well – its not practical nor easy to list everything, but I am certain I’ve at least addressed most of the bread and butter issues already), I still think Singapore is not as worth it compared to Canada, especially after considering the differences that cannot be priced – better quality of life, greenery, fresher air, lower stress, culture, pace of life… etc. Afterall, while some costs in Canada are higher (i.e. food and shopping needs, professional services), big ticket items are either comparable or cost lower than in Singapore.

I hope my observations here will give a different perspective to people who always thought that Singapore has low costs of living, taxes and etc. Because once you add up everything tangible and intangible, you’ll see for yourself the truth.

© 2008 this lush garden within.