Saturday, February 17

2/17/2007 12:01:00 PM

Budget 2007: More money for the government, less money for the needy

In this Year of the Golden Pig, Singaporeans could hardly have asked for a more lavish lunar New Year present that what they got in the Budget presented in parliament by Second Finance Minister for Finance Tharmun Shanmugaratnam.

Singaporeans couldn’t have asked for a more generous budget!

Before Singaporeans get drowned in a chorus of praise and appreciation for the compassionate nature of the governement, I would also like to declare my support for the institutionalisation of workfare.

The Workfare Income Supplement(WIS) provides help to self-reliant Singaporeans who may not be able to cope in today’s globalised world.

However, before everyone starts jumping on the bandwagon hailing the budget as a generous budget with an eye for the future, I would like to damper Singaporeans’ festive mood and the “feel good feeling” hanging over our heads. (sorry for being a wet blanket)

There was much hype prior to the announcement of this year’s budget, mainly because of PM Lee announcement that GST will be raised from 5% to 7%. The government’s justification for this increase lies in their determination to combat the problem of a widening income gap and an investment into the future. Fair enough argument? I believe Singaporeans are in general satisfied with this justification.

2007: “Is is beter to take your medicine sooner or later to stretch it out? And do you want to take medicine once or two times? I prefer to take my medicine early.

But I witness Singaporeans taking their medicine in 2004/5 and antibodies in 1994. Economy good raise GST, Economy bad also raise GST. There doesn’t seem to be any logic behind this.

A closer look will tell us why. In 1994, the GST was introduced for the first time. Interestingly enough, it was a strategic move to shift our tax burden from direct taxation to indirect taxation. With this mind, the ruling government started cutting its corporate tax rate to its current rate of 18% and increase GST from 3% to 7%. It’s an ongoing long term policy move and the state of the economy only serve to justify the increase. (economy bad: must bite the bullet to restructure, economy good: better increase our resilience fast or we will lose the chance)

Thus, I believe that the GST tax rate will eventually increase to a rate of 10 -12%. In fact, a 15% GST rate is not that impossible after all, if one takes into consideration the marcoeconomic objectives of the government.

I forsee more misery and hardship for lower income Singaporeans! But hasn’t the government promised to help them in Budget’07. Come on. It’s worth noting that the Workfare Income Supplement scheme is a major policy change. For the first time, the state will be supplementing the market wages that low-wage workers receive. Minister Mentor Lee Kuan Yew is expecting Singapore’ income gap will narrow in the future.

2015: Look here, Singaporeans, our income gap has narrowed significantly since 2007, when we boldly took the move to increase GST to 7%, and subsquently 10%. The time is right to increase the GST rate to 15%!. I prefer to take my medicine now.

With an increase in GST from 5% to 7%, the Singapore government will be raking in $4.9billion worth of tax revenue. However only $200million will be spent on workfare. (4% of total tax revenues from GST!) Spending an additional $200 million on tops ups to post-secondary education accountis that much either. This speaks volume of their determination to establish workfare as a pillar of support and helping the poor to climb up the social ladder.

Will $200million a year help solve the widening income gap phenonmenon in Singapore?

In the first place, I believe the government has the capability to finance $200million of workfare on a yearly basis, with a tax rate of 5%.

The government would not have to give out $530million worth of GST credits if GST rate has been kept at 5%. Maybe more money from the GST credits should be channelled to the Workfare Income Supplement. But wouldn't that isolate your middle ground and rich Singaporeans? (What's the use of giving $100 to the rich over four years?)

It seems that the Singaporeans has forgot that with a cut in second-tier levy for foreign workers in manufacturing and services, the competitive edge is shifted from Singaporeans to foreign workers. Foreign workers are cheaper and Singaporeans will cost more due to an increase in employers’ CPF contribution rate and the demand for these workers will increase. What it mean is this. Singaporeans will find themselves out of a job and they no longer qualify for Workfare!

In concluding his budget speech, Mr Tharmun describes the Singapore’s spirit – can do, will do, do well. In my view after looking at the budget, Singaporeans will do well and they can do well, but Singaporeans especially those from the lower-come will do well with much more help.

The Singapore government has made the first step to help but there’s more they can do.

What about me?, asked Mr Lim, in his 50s who is on Public Assistance Scheme. Amid so much fanfare, no workfare for me!


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It came about in the wee hours of the early morning while being whisked away into memories of the past etched deep within the mind. Bittersweetness that tingled the tastebuds of his emotions and feelings, the only way out for true LIBERATION from this reality is what is behind the shadow of transcendence. Revolution, the taste of iron-rust blood coiled with the lingering bittersweetness is the only contemplation of which the simplicity of life has to offer in exchange for the shadow of transcendence.

Enjoy what i make out of maturity and the urge to eradicate the appalling lack of a national identity and political apathy among Singaporeans and more importantly, serves as a tool to awake and rouse the tendencies for political change among Singaporeans.


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