Tax revenue as % of GDP

I obtained the following figures from Wikipedia.


Tax as % of GDP

Country	Tax %
Denmark	49.1%
France	44.2%
Germany	39.3%
UK	37.4%
New Zealand	36.0%
Canada	33.3%
Australia	30.6%
USA	28.3%
Japan	27.9%
China (PRC)	17.1%
Malaysia	15.5%
Philippines	14.4%
Thailand	13.0%
Singapore	13.0%
Hong Kong	12.8%
Indonesia	11.0%

It seems that the first world countries have a ratio above 25%. Even the USA, has a tax rate of 28.3%. Singapore has one of the lowest tax rates and competes with Hong Kong and Indonesia. The tax rate is lower than the Asean countries. Perhaps, the tax rate of Singapore and Hong Kong is distorted as a large part of the revenue comes from land sale, which is probably not counted here.

A higher tax rate means that more social services are provided, such as health care, welfare and financial security, as is the case in the first world countries.


Another survey by International Living showed that the countries with a higher quality of life score are those in Europe and other first world countries. It seems that this is correlated with higher tax rate.

I am in favor of higher tax rates to provide more social services, following the example of first world countires. It will also help to narrow the gap between high and lower income earners. Read my views here.

Tan Kin Lian

Practical Guide to Financial Planning - a gift

One customer bought 30 copies of the book to use as a gift to her friends. She found it to be very easy to read and useful. Another customer 10 books to be used in the same manner. You can order the books here. If you wish to buy 10 books or more, send an e-mail to kinlian@gmail.com to get a special price.

Twisting of Life Insurance Policies

Twisting occurs when an insurance agent ask the consumer to give up an existing life insurance policy to buy a new policy by stating that the new policy has some useful features. This is usually misleading and bad for the customer. It has been a rampant practice in many countries, including Singapore, for many years. By switching insurance, the consumer has to incur the upfront cost (of two years premium) again. This is how insurance agents continue to make a big income at the expense of the consumers.

Many consumers are not aware that they are being skimmed. Those who are, felt embarrassed and prefer to overlook it, rather than bring the agent to account. This is how the bad practice has continued for so long.

If consumers allow this type of practice to continue, they will have very poor return on their hard earned savings that they put into life insurance. They will not get a fair return. What a pity!

Tan Kin Lian

The Apathetic Generation

"Lucky Tan wrote" :

I got the idea to write the above from Tan Kin Lian's blog in which he posted this brilliant piece, The Lost Generation, by Jonathan Reed.

 

I rewrote some of the words from the original to make it more relevant to Singapore:http://singaporemind.blogspot.com/2010/02/apathetic-generation.html

 

Agent tried to sell high cost insurance policy

A consumer wanted to buy a Term Insurance policy under a Family Policy. She approached an agent who recommended a Whole Life policy (Vivolife), on the argument that the Whole Life policy provides a return on the premium. The comparison is not made on a fair basis, and the consumer was confused.

I asked the consumer to send the benefit illustration to me. I found that the Whole Life policy had a high "effect of deduction. The amount deducted represented more than 40% of the accumulated premiums - which is too high. Why should a consumer give away over 40% of the accumulated value of the savings to the insurance agent and to the insurance company?

Many consumers are still being given bad advice by insurance agent. To get an idea about the premium that you should be paying for Term Insurance, go and visit this website in America.

Tan Kin Lian

Practice to develop a skill

I have practiced more than 100 games on this simulated environment to pick the best stocks. I find that it is possible to catch the trend and to make better decisions. While this is applicable to the simulated environment, the skill is useful in the real world. I will look for data from the real world, to see if the strategy also work well.

Click here to try this simulation program. Be patient and persistent. Try the simulation many times, until you get the skill. Go from level 1 to 9, and try again. And again. Skill comes from constant practice.

SCMP:Legco panel to call senior bankers over Lehman minibonds sales

Hong Kong's parliament is active in investigating the minibond saga. Read this report.

The Legislative Council committee investigating the Lehman Brothers minibonds saga will summon senior representatives of six banks to testify before its hearings, committee chairman Dr Raymond Ho Chung-tai said. The banks are: DBS, ABN Amro, Citibank, Dah Sing Bank, the Bank of China and Standard Chartered Bank. Securities and Futures Commission chief executive Martin Wheatley will testify before the inquiry again on Tuesday.