A basic rule that we understand is, for most of us, the only way to finance our expenses is by earning more or saving more or spending less. Governments and citizens of different countries have their own ways of managing this. One way for governments to earn more, is by taxing its citizens more just like citizens who would earn more at their work. Governments would impose extra taxes and then spend the proceedings from taxes on other citizen groups to ensure that the general standard of living improves and there is parity across most citizen groups.
The Scandinavian way of earning more(Sweden) is to tax its citizens more and then directing the amount towards those who are in need of support, and providing complete welfare benefits to all. In fact the tax on the highest income bracket is almost 60% in Sweden. This does not allow citizens to save a lot.
The Singapore way:
In Singapore, the situation is very different. The government does not believe in the Scandinavian model. It follows the progressive tax system. Here, the basic rule of the government is to target help where needed without penalizing others. It achieves this by imposing lesser tax burden on its citizens. The highest income earner pays just around 20% tax, which allows them to save more. But, this in turn does put pressure on the government as direct taxation is one of the major sources of revenue for any government. Without this method, the government is unable to spend on other areas which need investment though the government may try its best to do so.
Over the years, the Singapore government has been spending increasingly on its elderly, lower and middle income groups, on subsidies related to healthcare and better social assistance benefits. But unlike other countries like Sweden, who also charge more tax, Singapore believes in also reducing tax burden on its payers and using these finite resources to help the ones who need it most.
At times, there is pressure on the Singapore government to increase spending on healthcare and social welfare areas but with the limited resources it generates from its tax payers, they are still doing a great job. It is mainly due to all such efforts by the Government that Singapore has been ranked second for the fifth consecutive year in the Global Competitiveness Report. This report is prepared and released year after year by The World Economic Forum, which measures 12 parameters ranging from infrastructure and healthcare to financial market development.