Although these tax cuts may seem attractive in helping to draw more foreign talents and investments especially in these times of economic slowdown, the cuts should be avoided as these taxes should be the main means of supporting social welfare. Further to this suggestion, the government should also not raise GST further and should pare down the use of GST for providing public assistance.
The Minister for Community Development, Youth and Sports, said in an exchange in parliament on March 9, 2007: “We can always do more (in providing public assistance) and we can always raise GST further.”
The raising of GST further, will put a huge tax burden on the poor. Some studies show that the lowest 20% of the population pay more than 15% in taxes, while the top 1% of the population, merely pay less than 5% in taxes. As the poor or the “new poor”, typically spend all their money on everyday necessities, the further increase of GST will be regressive.
Although people tend to shrug off GST as there is no tax-return or large lump-sum payment involved, further increases to the GST should be avoided as it is a myth that GST is fair because it taxes consumption.
Although perhaps 80% of Singaporean families now have refrigerators, stoves, color TVs, telephones, radios, VCRs or DVD players, microwave ovens, washing machines and cell phones, prosperity cannot be measured by how much food you have stored in your refrigerator or by how many DVDs you have stacked on the shelf. Prosperity is but a sense of financial security and peace of mind. And by that measure only a small percentage of the middle class (or the “sandwich class” as the Prime Minister acknowledged in his National Day rally 2008) enjoy it today, and certainly none of the poor.
Some studies suggest that 25 percent of “sandwich-class” families are at a high risk of slipping out of that class entirely and another 44 percent don’t have what they need to remain securely in it. There is a sense that social mobility is reversing as the cost of essentials outpace actual income.
The 2009 budget has to ensure that the lower-income have enough help to move up and that “sandwich class” gets back its economic footing, without which any talk about shared prosperity is feint.
I was at the dialogue session on budget 2009 today, chaired by Dr. Amy Khor and Mr Ng Wai Choong Deputy Secretary (Policy), Ministry of Finance. Wai Choong mentioned that the focus of the 2009 budget would be on helping businesses to sustain their competitiveness. I aired my concern that in the midst on focusing on the competitiveness of businesses, the needy and also the middle class cannot be forgotten. There must be enough assistance and incentives given for these groups of people especially in these times of economic crisis, which could be drawn out.
Some people from the business community were there to advocate that the government should make it easer for talented foreigners to come to Singapore to work as they demand a lower salary. One businessman actually said that he needs to pay a top rate chef from China only $1200 per month but no Singaproean top rate chef would work for that salary. Another business person said that China workers are willing to work for $2 per hour. I highlighted the fact that even if !% of China are deemed “more talented” than Singaporeans, it would mean displacing almost the entire population of Singapore. I asked, “Can these displaced Singaporeans seek jobs in China?”
But anyway, we all should play an active role in citizenry in providing the feedback for Budget 2009. Click on THIS LINK to go for the next dialogue session. You can also provide your feedback here: http://www.singaporebudget.gov.sg/.