A Politically Correct and Safe Budget
The Minister for Finance Mr Heng Swee Keat’s Budget for 2018 is one which aims more for political correctness than to solve real problems.
In fact, the Singapore People’s Party is concerned that the Budget fails to specifically address how it will alleviate the one issue which is bothering Singaporeans and the Government included – wealth inequality.
In his Budget Speech, the Minister for Finance pays lip service to the call for more progressivity, saying that he would enhance progressivity and that the desire for a progressive system, with those with more contributing back to society, is fair.
However, the only measure he has appeared to come up with to enhance progressivity is to raise the top marginal Buyer’s Stamp Duty (BSD) rate for residential properties from 3% to 4%. For a $1.5 million home, this works out to $5,000 in additional taxes, which is not a significantly large sum “to affect the current momentum adversely”. And then he ends the subject by pledging to continue to study options to ensure that our tax system remains progressive.
Despite saying he will enhance progressivity, the Budget for 2018 will be characterised by its announcement to increase the regressive Goods and Services Tax by two percentage points, from 7% to 9%, albeit sometime in the period from 2021 to 2025.
The Budget announcement also seems to send some mixed messages.
We await Mr Heng’s explanation as to why he thinks the Government should spend $700 million on hongbaos for all Singaporeans aged 21 and above of between $100 to $300 when it is also talking about spending prudently and preparing for the future. Shouldn’t funds be spent in a way where there are specific outcomes and which helps solve a specific problem or to provide for a need in society? In saying that, we do recognise the economic value of having people spend the money to help boost the economy, which is a win-win for the Government – to provide cash handouts and to help boost spending.
In a Facebook message after the announcement, Prime Minister Lee Hsien Loong said that “Government spending will rise, especially in healthcare, infrastructure, and security” as he referred to the Budget as one which “is a strategic and integrated financial plan to build us a better future together.”
We look to the Government to explain to Singaporeans why then, is there a decrease in healthcare spending by almost three percentage points from FY2017 as this is inconsistent with its narrative about increased healthcare spending to cope with an ageing population.
We also do take note that the Carbon Tax will have knock-on effects on consumers, and will be studying carefully how this affects households and businesses along the way.
In closing, we urge the Government to consider the following recommendations which we have previously made in our earlier Statement:
• That young married couples who are not so keen or ready to buy their own homes be able to rent a flat from the HDB before their make their decision to buy a home from the HDB
• That young single Singaporeans be able to purchase their homes from the HDB when they are 21 and not have to wait till they are 35
• More resources be allocated to all our local Universities to help our graduating students seek roles or internships at companies soon after their graduate
• More support be allocated to the ITE colleges and Polytechnics so that these institutions can build partnerships with companies which will provide training and internships
• Greater support for agencies or VWOs whose primary roles are geared towards outreach for mental health well-being
• Greater allocation of support for volunteer or social workers in these areas
• More social workers to be allocated in schools across Singapore
• An insurance of social safety net, or the creation of a coalition of partners from the government and commercial sector which will help pre-seniors who are displaced to get retrained, and ready for the workforce
• Counselling sessions and services to help displaced pre-seniors to get retrained
We recognise that allocation of resources is never easy, but let’s not dispute that we are far from being one which has scarce resources, considering we had a $9.6 billion surplus for financial year 2017.
Clearly, this Budget does little to ease Singaporeans’ concerns with the rising costs of living in Singapore. More can be done to foster community integration and to reduce the class divide caused by wealth inequality.
Singapore People’s Party is disappointed that Budget 2018 seeks to play it safe and thereby misses the opportunity to make real improvement on the lives of Singaporeans.
Singapore People’s Party