You mean you wouldn’t pay 20cts more for every $10 for yours and your parents’ healthcare needs?

By March 27, 2020Current

TL;DR – And you’re also not making enough babies to save our ageing population.

We keep talking about how Singapore has an ageing population.

It’s easy to see why. Singapore has progressed from third to first world in the past 50-odd years. With better standard of living, better access to quality healthcare, people are naturally living longer. In fact, last year Singapore overtook Japan as the country with the highest life expectancy at 84.8 years old.

Another material demographic trend is that Singaporeans are having fewer children and we are also seeing more single people.

What this means is while our elderly is living for longer, we see fewer babies. Over time, the number of young people to support older people will decrease and also, over time, the number of older people will be more than the number of younger people, hence, ageing population.

In the last decade, Singapore resident population has grown older with more elderly and fewer younger people.

As at end-June 2019, the proportion of residents aged 65 years and over has increased from 8.8% in 2009 to 14.4% in 2019.

Yes, there are now fewer working-age adults to support each resident aged 65 years and over as indicated by the falling resident old-age support ratio from 7.5 in 2009 to 4.5 in 2019.

Not sure what Old Age Support Ratio (OASR) is?

The old-age support ratio (OASR) relates to the number of people who are capable of providing economic support to the number of older people who may be dependent on others’ support.

It is computed as the ratio of the working-age population (e.g. aged 20-64 years) per person aged 65 years and over in Singapore.

Over the past decades, the old-age support ratio of the resident population (comprising Singapore citizens and permanent residents) has steadily decreased. Factors contributing to this downward trend are what we’d discussed above, life expectancy and falling birth rates.

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Check out the scary trend over the years!


That’s right, from having 13.5 people supporting every one elderly Singaporean in 1970 to just having 4.5 people supporting every one elderly Singaporean now.

Our trend of ageing population means that by 2030, the number of elderly will increase by about 450,000 to 900,000.

In fact, the elderly is expected to make up almost half of the population in Singapore come 2050.


Can you imagine the escalating healthcare costs?

Healthcare expenditure has been increasing over the years. Did you know that Government spending on healthcare was S$3.9 billion in 2011 and this jumped to S$10.2 billion in 2018?

Just to give you a clearer idea of what the surge in elderly-related healthcare costs look like: The number of cataract operations on seniors increased from around 10,000 in 2000 to almost 30,000 last year (2019). Such procedures were less common in the past, because people did not live as long as they do today to need them.

Today, the average annual Government healthcare subsidies received by an elderly person is more than six times that of a younger person, or about S$4,500 more.

Since we will go from 450,000 to 900,000 elderly in a decade (2030), you can just extrapolate the additional healthcare costs this will bring.

Already in the Government’s healthcare plans include building six more general and community hospitals, four new polyclinics and more nursing homes and eldercare centres within the next five years.

How much money do we need in the coming decade?

A lot of money.

Right now, our average annual healthcare spending is 2.2% of GDP, and it will raise to 3% of GDP in the next decade. In today’s dollars, this 0.8 percentage point increase is about S$3.6 billion.

So where is the money going to come from?

All the governments in the world have only this same stable of revenue sources: Taxes, licencing and other such fees, reserves and borrowing. The world over, most of the governments’ revenues are from taxes. Many, in fact, most do borrow. But not everyone has the luxury of a war chest of reserves to tap on.

The Dive: A Curious Look at Where Our Funds Come From

Cut or remove GST and use the reserves?

Singapore is in a highly enviable position.

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Like how now the Covid-19 pandemic is hurting countries all over the world, and we too have been hit severely. But with the Resilience Budget just announced, we’re in a much much better position than most others. All of the measures announced in this supplementary budget did not ask Singaporeans to use our own money. Yes, unlike how in Malaysia, the Government has asked Malaysians to tap on their own money in EPF.

And make no mistake about this. Singapore is only able to draw on our reserves because of prudent governance and political stability over the past decades.

Oh how some opposition party leaders had been calling out the Government for being way too prudent, too cautious, too conservative and even too stingy.

“Do not raise GST! Use the reserves!”

“Why not remove GST when we have so much in our reserves? Just use the reserves!”

Thankfully the ruling party did not cave in to populist policies. They stuck to what they believed in, and pressed on despite the flak. And today, they showed us why it’s important to be so prudent. We’ve been saving for rainy days. And now it’s pouring.

Why GST?

DPM Heng had explained it this way,

“A broad-based tax like the GST is an appropriate and responsible way to pay for major societal needs like healthcare spending. Such spending benefits all Singaporeans, and so it is fair for everyone to bear some part of the costs.’

“This is about all of us taking shared responsibility to pay for our needs and our society’s needs, and sharing in the effort to provide for them. It is at the same time a Singapore-style GST that comes with offsets to ensure that those with lower incomes pay much less than those who are well off.”

Is 9% GST too much?


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Believe it or not, Singapore has some of the lowest consumption taxes in the world, even after the increase from 7 to 9%.

If you think about it, it’s really about paying just 20 cents more for every $10 that you spend to make sure that your healthcare needs and those of your parents are taken care of.


One important thing to note is that tourists, working expatriates and the top 20% higher income bracket pay more than 60% of GST in Singapore.

If you’re worried about the lower-income folks being “penalized” by the so-called regressive GST, don’t be.

One cannot just look at GST on its own, but to consider the holistic system. We have a permanent GST voucher scheme where the low-income group benefits the most.

As what Senior Minister Tharman Shanmugaratnam had said,

“Those who are better off pay, more of the taxes and get less benefits. Those with lower incomes pay some taxes – because everyone must contribute, but they get more of the benefits. 

“For every dollar the lower-income group pay in taxes, they get $4 back in benefits. For the middle-income group, every dollar they pay in taxes, they get $2 back in benefits.”


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Qiqi Wong

Author Qiqi Wong

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