Singapore's Gini Co-efficient after Government Taxes and Transfers vis-a-vis Other Major Developed Economies in Last Five Years

Mr Leon Perera asked the Minister for Finance how Singapore's Gini coefficient after Government taxes and transfers in each of the last five years compares to the Gini coefficient after taxes and transfers for other major developed economies, such as Japan, South Korea, the USA, the UK, France, Germany, Canada, Sweden, Norway and Denmark.

There are different methodologies used internationally for calculating the Gini coefficient. Singapore's Gini coefficient is typically reported based on household income from work per household member. The calculation by the Organisation for Economic Co-operation and Development (OECD) is based on the Square Root Scale1.

If we apply the OECD method to ourselves, then based on data from the latest available year, the Gini coefficients for Singapore and some major economies are shown in Chart 1.

Before taxes and transfers, Singapore’s Gini coefficient is low compared to many major developed economies.

After taxes and transfers, several countries have a lower Gini coefficient compared to Singapore. This is because they typically impose higher overall taxes on the working population and, in particular, on the middle-income, in order to finance large social transfers. In contrast, Singapore's approach is to keep our tax burden low and provide targeted support for the lower-income.

In addition, these calculations do not reflect the full range of Government policy interventions that are unique to the Singapore context. For example, many Singaporeans enjoy significant subsidies for the purchase of HDB flats, which have helped them own homes in a high-quality living environment.

Chart 1 International comparison of Gini coefficients based on the square root scale (latest available year)2