Generational Accounts in Singapore

Abstract

Instead of focusing on the government's annual budgetary position, this paper assesses long-term impacts of the current fiscal policies in Singapore using Generational Accounting (GA) analysis. By incorporating the age-specific profiles of the revenue and expenditure of the government for an average member of a generation, GA measures the fiscal burdens facing current and future generations. GA has been evaluated for most OECD countries with large governmentb s spending on public pensions and social welfare expenditure. Like most OECD countries, Singapore also faces an aging population. However, unlike OECD countries, Singapore has a fully funded social security system under the Central Provident Fund scheme. Our findings suggest that in contrast to the experience of most countries, the future generations of Singaporeans are likely to face lower net tax burdens than the current generations. Furthermore, simulation shows that the net tax burden of the future generations depends on the definition of government indebtedness.