Tuesday, February 2, 2010

Social services and taxation

The citizens of a country have to decide on the types of social services to be provided by its elected government and how the cost of these services should be paid for. In some countries, the government provides generous social services, such as old age pension, unemployment benefit, health care, education, and collects high taxation to fund them. In other countries, the government has a low rate of tax and provides minimal services, leaving the people to pay for these services in the private market.

There are various ways of collecting tax to pay for the social services and other cost of government. The most popular form is income tax (on earned and investment income) and levies but an increasing portion is now through consumption tax (such as Goods and Services Tax).

Many countries provide generous benefits but collect insufficient taxes to pay for these benefits, leading to a budget deficit. Some countries collect a lot of tax but provide low benefits, leading to a huge budget surplus (such as Singapore).

What are your views on social benefits and taxation? Give your views in this survey.