70% of Singaporeans effectively pay no taxes (not even GST) and still receive state support

Disclaimer: Unless otherwise stated, any opinions expressed below belong solely to the author. All data sourced from the Key Household Income Trends 2025 report, released by Singapore’s Department of Statistics this month.

The topic of taxation in Singapore, especially GST, which was increased in recent years, is a particularly hot one, with many complaining about life becoming more expensive as a result.

The truth is, however, that most Singaporeans really have no reason to complain. What’s more, despite being widely perceived as a low-tax destination (a haven for the rich of the world), Singapore’s tax system is in fact very aggressively redistributing money from the accounts of the wealthy to the pockets of the poor.

Of course, most Singaporean households technically “pay” taxes, whether on their income, property or whenever purchasing goods and services, but what really matters is what they get in return.

As it turns out, 70% of them receive far more than they contribute.

The rich pay 10 times more than they receive…

Every year, the Singapore Department of Statistics provides data on the financial situation of resident households (comprising citizens and permanent residents), dividing them into 10 equal parts—deciles—by their income levels.

As a part of its analysis, it compares how much each group pays into the national budget on average, and how much they get back in various government transfers, which are defined as “unrequited assistance/ benefits provided by the Government to households or individuals […] in cash or in-kind,” and are divided into three groups:

• Regular Government contributions: Recurring cash disbursements, top-ups or rebates (e.g., Workfare Income Supplement, GST Vouchers, Pioneer Generation MediSave Top-ups).
• Ad-hoc Government contributions: One-off disbursements (e.g., CDC Vouchers, Post-Secondary Education Account Top-ups, One-off Retirement Savings Bonus under the Majulah Package).
• Transfers in-kind: Value of in-kind benefits through subsidised services or goods (e.g., Education Subsidies, Centre-Based Infant and Child Care Subsidies).

Simply put: this is the value of everything that you directly receive from the government each year.

Besides other government revenue, like corporation tax or returns on reserves, these expenses are funded by taxes paid by individuals.

But as you can see below, the bulk of the burden is disproportionately carried by the top 10% earners in the society, who pay into the national budget an average of ca. S$27,000 for each household member, while receiving back only S$2,700.

Source: Key Household Income Trends, 2025/ Singapore Department of Statistics

In fact, they pay more than the next four groups put together and combined. Despite making up just 10% of all households, they are responsible for 42% of all tax receipts—income, GST, property and so on.

…and the poor receive almost 10 times more than they pay

Meanwhile, the bottom decile receives close to S$15,000 in government transfers annually, despite contributing just ca. S$1,600 in taxes (per household member)—9.2 times less.

In fact, if you look closely, you will realise that all groups up to the 7th decile pay less into the budget than they receive from it. This means that their total effective tax rate is negative—they pay no net taxes at all, while still getting extra money or valuable benefits.

In essence, if we tried to simplify and equalise it, all personal taxes in Singapore could be abolished for those 70% of households, and yet, they would still receive quite a lot of money.

Source: Key Household Income Trends, 2025/ Singapore Department of Statistics

This is important to remember, because the government has other expenses that are required for the country to function as a whole, like national defence, administration, judiciary or infrastructure (public transit, roads, port, airports, energy, water, etc.).

And yet, it is able to afford all of them while subsidising nearly 3/4 of local households, without having to borrow any money.

In practice, then, any tax increase, like a GST hike, is a redistributive tool primarily aimed at the richest residents, who earn the most but also spend the most and live in the largest, most expensive housing.

With the money collected, the authorities are then able to offset the increased costs for most regular Singaporeans while retaining the surplus, so it can provide better social or healthcare services as the country is ageing and its elderly require more support.

Why doesn’t Singapore simply abolish most taxes on individuals & cut welfare bureaucracy?

Given that most people pay no taxes when corrected for all the money received back, it might seem logical for the authorities to simply remove both taxes and many welfare programs so that the system is simpler and administrative costs can be avoided.

Instead of first paying and then getting even more back, people would just keep money in their pockets and just receive the extra money on an as-needed basis.

For practical reasons, however, this is not possible.

You cannot simply exempt around 3/4 of society from GST, while keeping it for everybody else. You also have to keep the personal income tax scale smoothly progressive, so it doesn’t incentivise hiding one’s income to avoid paying any tax if they fall below a certain point.

If avoidance of tax payment is difficult, then the government can collect all that it is due and then ensure that the money returns to those who need it—often sending back more than they paid—and control how it is spent (tying the payouts to specific services or providing targeted subsidies, instead of allowing for wasteful consumption).

The entire system is designed to collect money from the rich and then use it to guide everybody else towards the most desirable outcomes. Instead of being a simple handout, the government transfers to ensure their fundamental needs like housing, healthcare, pension, and utilities are catered to.

• Read other articles we’ve written on Singapore’s current affairs here.

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