Affordable (Dream) Home...

I read a comment somewhere in the intertubes that:

"A person earning $30,000 per annum has no business buying a $500,000 house".
This is in the American context, but I presume that it can be extrapolated for Singapore.

So, I got curious, and tried to find out just how much of a house I "should" be targeting at my current income level. I shall assume that by the time I can buy the house, I have an annual income of $36,000.

By the calculator provided here (US case), I can only afford $130,000 worth of house. (At 4.5% mortgage rate, no time frame.)

Another calculator here tells me that I can afford $128,000 worth of house. That's close to the previous one. (4.5% rate, 30 years, and approx $2000 in property tax + conservancy fee)

This calculator gives a value of $145,000. (It does not include other fees, but it has a downpayment element, which brings the loan itself to $125,000) Again, pretty close to the above 2.

The affordability calculator provided in the CPF site here computes to $165,000. This differs by approx 25%. Even reducing the income a little to simulate tax and fees generated a value of $154,000. Adding a renter that pays $600 a month bumps the figure to $213,000.

While I don't know which basic assumptions differ in the calculators, the US-based calculators are pretty consistent, while the Singapore one encourages higher loan. However, both cases have given me the same indication: Housing in Singapore is really expensive. To think that I'd initially estimated that I can afford a $300,000 loan.

Looks like I have another incentive to find a wife that prefers to remain in the workforce, and able to prioritize between handbags and investment.

56% Income Tax and 25% GST! Really?

I am always tickled when the Singapore media mentions that tax rate of other countries (in this case Sweden) "justifies" why some things can or can not be done in Singapore.
Here is the excrept:
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She also pointed to the tax burden in Sweden — tax levied on goods and services is 25 per cent, while income tax is 56 per cent at the higher end of the scale. “We’re quite different in terms of our tax structure, so the Government will have to balance all this.”
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Of course there's no mention that most Swede (just like most Singaporeans) would not be exposed to the higher end tax rate of 56%.

A simple dig would have unearthed this:
The Swedish Tax System
Swedish Tax Guide for Expatriates
And of course, some wikipedia data.

Now, while I am not an expert at tax matters, just skimming these documents have shown me that the maximum tax rate only affects people who earn at least the equivalent of $65,000. This amount and the tax exempt amount (which, at approx $3500, is less than Singapore's) is adjusted upwards yearly to accomodate inflation.

I also found out that the GST is a tiered one, with 0% levied on basic items such as medicine and public education. Foodstuff in general is taxed at 12% (except restaurant dine-in) and transportation is at 6%. As it is, Singapore has this annoying 10% service charge for restaurants. I did not have to pay any service charge/tips in Japan and I had way better service.

So I have come out with the other end:
The lower end tax a resident has to pay in Sweden is 0%, while it is 7% in Singapore.

(Another oversimplification, if you don't get it)

Priicey~

Hrmmm...

The taxi fare brouhaha has disappeared! Yet, there is still no follow up on the actual impact of the fare revision.

- Has the system become more efficient?
- Are the Taxi drivers happier?
- Are Taxi users happier?
- Are the Taxi companies happier? (need I even ask this?)

Problem solved? Who cares.

Now, another facet of the "We don't really know what we want, other than money" system.

We want to reduce road congestion.
Therefore: Add disincentives
- Make it more expensive/inconvenient to drive.

However: We give incentives (Wha?)
- Made it cheaper to own cars (lower COE, lower Tax)
- Made it more expensive to take public transport (yearly fare increment)

Homer Simpson would have a field day saying "DOH!".

Now, underpaying bus fare can get a commuter jailed.
But nothing will happen when the bus company overcharges the fare or sell fare cards with deposit that is non-refundable (I have always thought it is refundable).