Family & Life Magazine Issue 8 | Page 16

SHOW ME THE MONEY: A COMPARISON OF INCOMES Singaporean. Numbeo, the world’s largest user-generated online database of cost of living also states that the local purchasing power (the number of goods that can be purchased with a unit of currency) in Singapore is 63.36, but a much stronger 105.18 for Melbourne. And what about those pesky exchange rates that everyone keeps harping about? Well, a Deutsche Bank report, The Random Walk: Mapping the World’s Prices 2013, Before comparing individual consumer prices, we’ll need to benchmark incomes, spending power and disposable personal incomes across Singapore and Melbourne. We’ve decided to take an average exchange of SGD1.20 to AUD1, based on the year’s fluctuations that ranged between SGD1.30 and SGD1.10 for 1 Australian dollar. According to the Department of Statistics Singapore and Ministry of Manpower, the median gross monthly income (or the income of a typical worker in the middle of the income distribution of workers) including CPF contributions is SGD3,480. This means that after deductions, employees are left with 80 percent of their salaries to spend per month at SGD2,784. After income tax, it would leave them with about SGD2,727.90 for life’s necessities and paying the bills. This is before tax reliefs. [see TABLE 1] Over in the World’s Most Liveable City, the National Centre for Social and Economic Modelling (NATSEM) calculated the median income distribution to be AUD3,591.67 (SGD4,310) per month. Using both values and even with a much higher income tax rate that soars to 44.9 percent, plus a 1.5-percent deduction for Medicare Levy, the disposable income drops to AUD3,074.94 (SGD3,690). [see TABLE 2] Based on those numbers, it would mean that the take-home cash of a Melbournian is about 35 percent more than a It’s not a surprise that Singapore is the most expensive city in the world when you’re talking about a particular basket of goods and services that includes cars. And yes the cost of living has gone up, but is Singapore the most expensive city? It depends on what you’re comparing. AUSTRALIA Melbourne TABLE 1 Chargeable Income ($) On the first On the next Rate (%) 40,000 Gross Tax Payable ($) 40,000 550 7.0 7% x (41,760 - 40,000) = 123.20 Total Tax: $673.20 (year) or $56.10 (av. month) Personal income tax for a Singaporean earning $3,480/month or $41,760/year. TABLE 2 Taxable Income ($) Rate Gross Tax Payable 0 - 18,200 Nil 18,201 - 37,000 19c for each $1 over $18,200 37,001 - 80,000 $3,572 + 32.5c for each $1 over $37,000 $3,572 + (0.325 x (43,100 - 37,000)) = $5,554.50 Total Tax: $5,554.50 (year) or $462.86 (av. month) Personal income tax for an Australian earning $3,591.67/month or $43,100/year. TABLE 3: PRICE COMPARISONS BY EIU Item/Price When Singapore (1st) Melbourne (6th) Average US$ price 1kg loaf of bread Current $3.36 $4.43 $3.25 $4.87 $2.90 $3.77 10 years ago Average US$ price 1 litre unleaded petrol Last year 5 years ago $2.97 $2.19 Current $1.73 $1.35 Last year $1.74 $1.49 5 years ago 1 bottle table wine (750ml) $1.36 $1.28 10 years ago $0.69 $0.57 Current $25.04 $22.28 Last year $25.65 $25.03 5 years ago $22.52 $17.45 10 years ago $13.25 $11.11 TABLE 4 Item/Price Singapore (av. S$) Melbourne (av. AUD) Fresh milk 1L (Pura) 3.70 1.95 (S$2.34) White bread 650g 1.43 1.08 (S$1.30) Minced meat 500g 7.85 4.33 (S$5.20) San Remo Pasta (spaghetti) 500g 2.45 2.43 (S$2.92) Broccoli 300g 2.52 1.95 (S$2.34) Tomatoes 500g 2.13 3.48 (S$4.18) Carton of 12 eggs 3.18 4.52 (S$5.42) White rice 5kg 9.85 13.05 (S$15.66) Toilet paper 20 rolls 9.58 10.70 (S$12.84) Milk formula 800g tin 45.61 21.58 (S$25.90) Diapers 24pack 8.2 9.1 (S$10.92) PROS Stronger purchasing power (your dollar stretches further) Arguably higher income, in spite of higher taxes Cheaper baby milk formula Cars are cheaper Slightly cheaper to raise a child CONS More expensive to eat out Pricey public transport Costly entertainment, clothes and cigarettes 16 Family & Life • May 2014