The city state is home to the third-highest density of millionaire households in the world after Qatar and Switzerland: one in 10 households.

It is also home to super-low income taxes and a cut-price corporate tax rate of 25¢.

How do they do it?

"I can tell you in a nutshell why taxes are low here," says Annette Beacher, an Australian economist based in Singapore with TD Securities. "Scant welfare, no free health or pensions here. Unemployment, aged care, disability and illness are all the responsibility of the individual or extended family."

When it comes to taxes, citizens get what they pay for, Beacher says.

"It's very sad to see the elderly still working, but that is the reality here not to expect government support."

It's a reality Aussies have proven loath to accept, despite Treasurer Joe Hockey's clarion call to "end the age of entitlement" through deep cuts to pensions, health and education spending.

The Coalition's first budget failed the fairness test. It also failed to fix the books.

In the past six months alone, the plummeting price of Australia's major export, iron ore, has wiped another $30 billion off the bottom line.

Cabinet's razor gang continues to search for new spending cuts to fund new promises on childcare and families.

But a growing chorus of economists is pointing out the obvious: Australia has a revenue problem, not just a spending problem.

"The problem we have is a long-term mismatch between what people expect government to spend on them and what they're willing to pay in taxes," says Saul Eslake, the chief Australian economist at Bank of America Merrill Lynch.

Eslake says government spending is now 1.75 percentage points above the Howard government era average. But revenues are about 2.25 percentage points below the Howard era average.

"If you take the Howard era averages as benchmarks there is a strong case for reducing government spending and there is a strong case for increasing government revenue."

The chief economist at BT Financial, Chris Caton, agrees: "It is inevitable that taxes as a share of the economy do have to rise."

"I think we clearly have a medium-term balance problem that needs to be fixed and it would be silly to rely only on one side or the other. We are not a high tax country."

The chief executive of the Grattan Institute, John Daley, says the history of budget repair suggests a need for a higher tax take.

"There are very, very few governments that have ever done that on the expenditure side, invariably it happens on the revenue side." The Kennett government cut public servants and closed schools but it also introduced a $100 tax on all households to share the pain. It's about equity, says Daley. "If you try to fix on the spending side, you only hit the bottom half. If you fix on the tax side you more or less hit the top half."

Higher taxes are inevitable, says Daley, because Australians have made some clear choices to spend more money on health and disability support.

"That's the choice we have made as a community and I don't see us as a community about to walk away from that. I just don't think you're realistically going to bridge that gap in the foreseeable future on the spending side. ."

And higher taxes are coming anyway. Even under a "do nothing" scenario, economists point out that Australians will end up paying higher taxes on personal incomes through bracket creep – when rising incomes push more people into higher tax brackets.

Either way we pay. But some methods are better than others, economists say.

Broaden the base

Eslake says the way to go about increasing the tax take is not to raise tax rates, but to broaden the base .

Similarly, spending cuts should not be about cutting payments to those who rely solely on government support, but about reducing the proportion of citizens who get handouts from government.

"The objective of all of this should be the same philosophy as Howard in 2000: to broaden the base and lower tax rates," Eslake says.

Taxes on personal incomes remain the biggest contributor to government coffers.

And yet, many loopholes apply. Most economists agree that tightening up on these loopholes in the income tax system is the simplest and fairest way to restore the tax base.

Cut superannuation concessions

The flat taxation of super at 15¢ in the dollar delivers the biggest benefits to those on high incomes, Daley says. Australia's trillion-dollar superannuation system is now a significant drain on the tax base – about as big as the Age Pension itself. It has also failed to bring about a significant fall in the number of retirees reliant on the Age Pension. Super contributions and earnings should be taxed at a rate that better reflects a person's ability to pay.

Tax family trusts as companies

Family trusts are used by high income families to distribute income to low-earning family members to minimise income tax paid. They offer a way to reduce income tax not available to low income earners and result in much lower income tax collected. Eslake says taxing trust incomes at the company tax rate of 30¢ in the dollar would be better than the current situation where income splitting allows families to pay a much lower marginal rate.

End the discount on capital gains

Investors are currently entitled to a 50 per cent discount on any capital gains they enjoy on shares and property. Taxing gains at the full amount would boost income tax collections and help to cool the investor frenzy in Australian property, particularly in Sydney.

End negative gearing

Property investors are allowed to use losses on investment properties to reduce the personal income tax they must pay. Millions of landlords use the deductions every year. Ending this loophole could raise billions of dollars in personal income tax.

End dividend imputation

Under this unique system, Aussie shareholders get a tax credit for any tax paid by companies on their dividends. Shareholders can reduce their personal income tax paid by the equivalent amount. The aim is to avoid double taxation. But it is a significant drain on revenues, particularly thanks to former treasurer Peter Costello's decision to not only allow the credits to offset personal income tax, but to be claimed as cash back from the government if they have no tax bill to offset. According to Eslake, the revenue raised from ending this could fund a cut to the company tax rate to 25 per cent.

Increase the GST

Most economists agree it is time to raise both the rate of the GST and apply it to more goods and services.

Chris Richardson, a veteran budget watcher and director at Deloitte Access Economics, says increasing the GST "stands out as a logical thing to do". "This is a tax that doesn't damage the economy much and we can fix fairness by compensating low income earners appropriately."

Eslake calls it the elephant in the room. "I think there's an unambiguous case for broadening the base and increasing the rate." While often dismissed as regressive, Eslake says applying the GST to excluded things like private school fees and health insurance would not hurt fairness. And even on food, the fairness argument is less clear because the top 20 per cent of households spend five times as much on fresh food as the bottom 20 per cent.

Daley says we have no choice but to look at increasing consumption taxes, given the global race to the bottom on company taxes. "Singapore's company tax rate is essentially parasitic on the rest of the world. It's beggar thy neighbour."

Only a GST increase will deliver the revenue needed to remain competitive.

The GST raises $57 billion a year as a 10 per cent tax levied on 47 per cent of household spending. If applied to 100 per cent of spending, this would raise another $50 billion. If you then increased the rate to 15 per cent, you'd get another $50 billion. "We're talking about a lot of money here," Eslake says.

If combined with compensation for low income earners and a crackdown on tax loopholes for the wealthy, such a package could go a long way to solve the government's budget woes.

Tax land

Economists like taxing the value of land because it is hard for taxpayers to avoid coughing up. Even Singapore applies a progressive tax on property values, including owner-occupied homes.

Eslake says Australia could do the same. "Get rid of stamp duty altogether and replace it with a broad-based land tax and apply it to owner-occupied homes." Home owners could get a credit for any stamp duty they paid in the past seven years and use it to reduce their land tax bill, to avoid double taxation. Farming land could be exempt, or only apply to the land around the homestead. Local councils could collect the tax. "Good tax reform is about getting the lowest possible rates over the biggest possible base," Eslake says.

All of these options are on the table for the Coalition's tax review, which will craft its tax policy to take to the next election.

But the clock is ticking on budget repair, Richardson says. "I'm happy that much of the budget repair tax should be in spending, but equally I'm happy that we need to do more on the revenue side".

"What you can't do is keep your head in the sand."