A Government needs to collect sufficient tax to pay the expenses of running the country and to provide the social benefits to its citizens.
The tax should be collected fairly from the citizens. Those with higher incomes should pay more tax. A high income earner should pay more tax willingly. It is better to earn more and pay more tax, rather than be in the opposite situation.
After paying a higher amount of tax, the high income earner should be entitled to the same social benefits as other citizens. They do not expect to receive more social benefits, but they should not be given less.
Subsidised Healthcare
I am against means testing for subsidized health care. I believe that all citizens should be entitled to education, safety, security and the other benefits of living in Singapore, including access to subsidized health care.
We should avoid the requirement for people to provide proof and be labeled as “poor” in order to receive subsidized health care. It is best that this type of classification be avoided.
Type of Housing
The Government now distributes budget surpluses to the citizens in some years, based on income tax level or type of housing.
I prefer the distribution to be made equally to all citizens or be based on objective criteria such as age or number of members in the family.
There is some inequity in distributing the benefits based on type of housing. Some retirees have little or no income, but live in private properties bought at a low price many years ago. Some live in the private property as tenants, not owners. These people are not as well-off as the owners.
We also have the cases where the residents of HDB flats own expensive cars and are quite wealthy. They enjoy the higher payouts based on their type of housing.
It may be argued by the proponents of the current method of distribution that the percentage of odd cases (i.e. those who receive more or less than they should be entitled to) is small. Nonetheless, it is better to avoid this anomaly entirely.
Types of taxes
I prefer a system of taxation where more revenue is collected from income tax. Those who earn more, pay more tax.
In recent years, there has been a move to shift taxation from income tax to consumption tax, which is known as goods and services tax (GST) in Singapore. GST has increased the cost of living for everyone and has hit the lower income people hardest.
I hope that the GST will not be increased further from the current level. If possible, it should be reduced to 5 percent or lower. If more tax revenue is required, it can be collected from income tax, property tax and other sources.
Minimum Wage
I recent years, the low wage earners in Singapore are hit hard from two sources – lower wages due to competition from the influx of foreign workers and a higher cost of living.
It is time for us to consider the need for all workers to be given a minimum wage that will allow them to earn enough for a hard day’s work to maintain a basic standard of living for the family. The same minimum wage can apply for foreign workers, but as the foreign worker’s levy is deducted, their net wage will be lower.
A minimum wage will raise the operating cost for some businesses. The business can still be made competitive through lower rents, levies and a lower profit margin (but still attractive to the investor). If wages are raised to the minimum, it is likely that there is less demand for business premises. This will lead to lower rentals that will offset the higher wages.
Foreign Investments
The low corporate tax strategy is aimed at attracting foreign investments into Singapore. We should examine some of its negative impact.
I observe that some foreign investors set up businesses in Singapore but depend heavily on low cost foreign workers. These businesses create few jobs for Singaporeans. They create a high social cost – depressed wages of local workers, congestion in housing and public transport and changes to the social fabric.
We have also attracted many wealthy foreigners to bring large sums of money into Singapore. They increase the prices of private property to levels that are not affordable to most citizens.
Low interest rate
Even the money brought into Singapore by foreign investors has a negative impact on Singaporeans. They cause interest rate to be at a low level, among the lowest in the world. The low interest rate means less interest income on the savings of Singaporeans, especially the retired persons. The low interest rate makes it difficult for them to have a sufficient income to meet the cost of living.
Conclusion
Our past economic strategy has contributed to the economic success of Singapore. They have also contributed to social problems. Some of these problems have not been understood or analysed.
I believe that a system of higher corporate and income taxes, and lower consumption tax (i.e. GST) may be more beneficial to citizens and permanent residents living in Singapore.
We also need to review the current policy on “means testing” and also the manner of distributing budget surpluses based on type of housing. I prefer a system of equal access to the social benefits. I hope that these issues can now be considered.
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Related posts:
- $460,000 benefits for lower-income family over 60 years: Really?
- $3 billion benefits to cope with inflation?
- CPF – social security or social bondage?
- Growing income gap threatens social fabric
- All men are equal unless…
Good article. Unfortunately, it will remain just a article. Many of the point raised involved some sacrifice on the Singapore government… now when will that happen ? Only singaporean are told to “sacrifice”… since when did the singapore government “sacrifice” for us ???? Since many people equate the government = PAP, only fair to say that PAP practice double standards….. sick and tired of the MSM trying to protray our PM as “funny”, humorous etc…….
PM lee comment to laughter from the audience,
PM lee comment to cuckles from the audience etc…
“MSM trying to protray our PM as “funny”, humorous ”
MSM is trying too hard to impress. It is not necessary as the JOker PM has a innate talent as a clown although at our expenses.
Say wrong thing, censor, but his speech is transcripted on internet. Now such clown can even do it knowing that it will be subjected to public scrutiny on the web, and how about those done behind the scene without public scrutiny and lack of public information etc Creative accounting, window-dressing reserve, freak statistic to support their agenda ?
To tell me that he held the highest military officer before show how government nepotism happens in Singapore. How can such a inept clown ever promote as PM if not nepotism ?
A strong leadership no matter if military or politics shows inspiration, responsibility, competence and vision, however this is dearly lacking in the clown, and that is why after he took over Singapore, the social and society fabric seem to collapse day by day. A country is only as good as the ruling leadership especially given that one is ruling as dictatorial regime.
http://en.wikipedia.org/wiki/Lee_Hsien_Loong
“Lee joined the Singapore Armed Forces (SAF) in 1971 and rose quickly through the ranks becoming the youngest Brigadier General in Singapore’s history. In 1978, he attended the US Army Command and General Staff College at Fort Leavenworth.”
After all of these training and experience, all we can get is substandard leadership ? This means the clown is meant to be a clown not a leader.
PM lee comment to take money from the audience. GST to help the poor, and money disappear and endup in coffer’s reserve ?
Our minister’s bonuses are based on the GDP growth rate. Social problems are not easily quantifiable in dollars and cents and are thus off the radar. Then again, keeping the population emancipated facilitates the “buying of supporters” (paraphrasing PM’s words).
Means testing is the brainchild of the best health minister that Singapore has ever had. Even if an elderly does not step into any hospital, he is already slapped with double digit annual inflation of his Medishield premiums over the last couple of years.
I have wondered whether our medical subsidies (e.g. for hospitalization) are “market subsidies” or “cost subsidies”. Does anyone have the info? Thanks.
GDP growth ?
GDP = consumption + gross investment + government spending + (exports − imports)
As you can see, real growth must be adjusted for inflation. Else, everything being equal, an inflation of 7% will automatically increase your GDP by 7%.
The are different variables involved and without full data on our GDP, we will not know how consumption is skewed over the different variables (sector and industry wise for private consumption) and one of the variables is governement spending which comes from direct / indirect taxation.
Could anyone provide some comparatives over the years over our GDP growth to enlighten or alternative explanation to correct me if my assumption is wrong.
I have seen the acronym MSM used a few times.
For a while, I though that it is a merger of:
MM – minister mentor
SM – senior minister
Now, I realise that MSM means “main stream media”. Am I right?
Tan Kin Lian ,
yes , you are right.
Has MSM means MM – minister mentor
SM – senior minister, most blogs will have been sued by MM for Defamation. (haha)
This article seems sensible, and I agree with the author on some of the points, and disagree on some others.
Subsidies – I believe that the richer should be taxed more (as long as the richer still remains richer than the poorer after taxes, so that everyone has an incentive to work harder to earn more) and also enjoy equal social benefits. However, I also believe that the poorer should be entitled to more subsidies. For example, noone should be deprived of medical care, but the poor pays less. Noone can be deprived of good education, but the poor pays less.
Means testing – The main difficulty, as pointed out in the article, is how effective means testing can be implemented in practice, i.e. do some poor people get less subsidies than others, and do some rich people get more subsidies than their peers. If means testing is not practical, I would rather see taxes on the poor reduced.
Tax – It is evident that higher GST do hurt the poor. What is unclear is whether there is a better way. Does GST turn out to tax the richer more because they spend more? I would think that it might be a better idea to maintain low corporate tax to attract foreign investments, increase taxes for the rich (both from citizens and foreign workers), lower taxes for the poor (I’m ok with increasing the GST as long as there is evident that it is a more efficient way of taxing the rich), and increasing subsidies for the poor, and giving equal opportunities for everyone whether rich or poor.
Minimum wage – it is a double edge sword.T oo high, it’ll reduce the competitiveness. Too low, it doesn’t provide for the poor. I’m just wondering how strong are the evidences for and against it.
Overall, it is really an excellent article. Hopefully the govt can provide a response to enlighten all of us.
good article…but a bit of wishful thinking leh? We need a Moses to cast the rod before the pharoah! So how Mr. Tan?
from here, we can see that the government is all the way pro employers and pro wealthy and not pro workers at all.
Min wage – it will increase business costs.
Income tax – will be a burden to the rich
Estate tax – will be a burden to the rich
Means testing – without it it will be a burden to the government.
This is what Singapore is about.
Dear Mr Tan,
I always like your articles as they are written in a way that is very insightful yet easy to understand.
Being the cynic that I am, I’d just like to comment that with the way things are nowadays, this government will never agree to something like minimum wage or reduction in GST.
Why? Because it will mean slaughtering two of their prized “sacred cows”.
1. “Foreign Talent”:
Minimum wage will not work if there are no controls on the number of foreigners – For every aging “tiger beer auntie” accepting the minimum wage, there will always be more than 100 young nubile chicks from overseas willing to do the job for the same pay plus “extra service”. It will just mean more unemployment for locals. Worse, to get around the minimum wage I foresee some low wage workers will be forced to give undertable “cash back” to less scrupulous employers to get a job.
2. Defence and $10.8b Black Hole:
The progressive tax structure above will not work because our government cost structure is inherently uncompetitive vis-a-vis our main “competitor” Hong Kong. This is because as compared with HK, all else equal, Singapore spends S$10bn (about 20% of total budget) more every year on defence. They cannot tax the foreign rich more or else they will move their money to HK instead. They also cannot raise corporate tax or else MNCs will move to HK. So to make up for it, rather I should say, WE make up the difference every year in the form of GST, ERP, fee hikes etc etc.
While I don’t disagree that we have to keep defences strong and credible, we need to ask what the $10bn is for every year and how is it spent? It is one big black hole that seems to get bigger, yet no one dares to ask any questions because everything is “top secret”. I don’t say this lightly, but with many Singaporeans in financial hardship, a 10% reduction in defence spending would yield $1b every year. That would give the bottom 250,000 Singaporean a $4000 CPF/medisave top-up or financial assistance or education bursaries every year.
It is a very good article. Full of fiscal logic.
Unfortunately it will not be accepted by the Government,
i advocate screening of foreign talent not to reduce competition for all jobs but to avoid competition in necessary sectors. for example, if there is sufficient tiger beer aunties, i don\’t see why we need foreign beer tenders. but i do believe that singapore needs to import foreign talents to ensure the knowledge-based sectors are competitive with the best in the world. having said that, we must dare to compete with the best foreign talent.
I hope i\’m not unreasonable. i don\’t demand the government to accept all my suggestions. i can accept differences. all i hope is that they can be transparent enough provide evidences to support their point and also answer my questions.
Frankly, I don’t see the point of being a Singaporean. I have been a PR for many years and have enjoyed all the benefits (safe environment, low tax, good education for my children) all thanks to the Singapore government, but I will NEVER want to give up my citizenship of another country. My first child (born here but a PR) is in JC and he has the best education that money(not all my money, mind you) can buy. He is pondering whether to accept a scholrship by the Singapore government (and thus becoming a Singaporean and serving NS) or not. I have advised him not to do so as serving NS will only slow him down and becoming a Singaporean will involve sacrifice one is not prepared to pay.
The focus (as important as it is), ignores the biggest fundamental challenge today. High inflation kills off savings and impacts more Singaporeans (particularly the unemployed and no longer employable eg aged) than tax.
The CPF minimum sum is pegged to the inflation rate. If inflation goes up, more Singaporean savings get tied into the CPF minimum sum. I agree interest rates should be increased. However, the interest rate increase can only be useful if these rates are higher than inflation rates. That won’t happen but I agree every little helps.
What I can suggest is allowing Singaporeans to purchase higher yield financial instruments eg bonds (like what US govt does with its treasury bonds). Right now, individuals aren’t really allowed or encouraged to do so. Instead money is kept in low yield savings accounts that only benefits one industry.
Kin Lian’s suggestions regarding income tax have a number of question marks. One can’t increase the top rate of tax as tax planning allows excess taxes to be funnelled to corporate tax (which is a lower tax rate). That only means either increasing graduated rates (which hits the middle class far more) or increasing the tax base (which means the lower 50% of Singaporean’s who don’t pay income tax will have to bear some of the burden. Either defeats the purpose.
1% of GST = ~3% of individual income tax. Removing 2% GST from the current 7% rate will mean increasing graduated rates by at least 6% and more since these are only graduated rates (and in any case borne by the squashed middle class).
What I’d like to see is the exemption of GST for high end housing and multiple property purposes being removed. Don’t see why people who buy million $ property or multiple properties esp for investment get GST exemptions and the net impact is the rest of us staying in smaller flats. Whilst there is a gap in stamp duty rates, I don’t see that as anywhere near equitable as the buyer enjoys a far higher GST offset on a higher value property purchase. Australia is one country that imposes GST on property transactions.
My calculations suggest such a measure can more than adequately fund GST exemptions on basic necessities which will impact the lower income far more or as the govt like to do, fund more direct assistance to the lower income.
I also wonder if its fair to have the property tax rate for foreigners esp those squatting on multiple properties.
The estate duty removal is perhaps the hardest to bear since that is ironically the most equitable tax in the Singapore tax structure.
I agree on the need for a min wage (something that the WP advocates) but the impact will only be felt if the min wage is extended to foreign workers. That could have a massive impact on wage costs which cannot be offset by mere rental drops alone. Otherwise, it would affect Singaporean job seekers far more.
I like the article. It reads like a Fairy Tale, in fact these are ideals everyone wish can come true. Unfortunately, these proposals requires too much sacrifices on the part of our all-wise-and-knowing government.
As is, benefits as a citizen, is PALTRY at best… all interests are preserved for the government by the government. Enoughs said.
A few people have commented, “this is a good idea, but the Government will not agree”.
I suggest that we express our opinion. I hope that more people can come forward to say that they like higher income tax and lower GST. Or that there should be a minimum wage. Or that interest rate should be increased.
We can let the Government make their decision separately. Let us take one step at a time.
Sounds good to me. I like higher income tax (not for myself though), lower GST, minimum wage and higher interest rates (on savings not loans).
I fully agree that everyone should have access to subsidized basic healthcare. As to what our ‘best’ Health Minister had in mind when he proposed means testing, I really cannot understand.
I suppose it’s all because of our petty Gahmen’s mentality that we peasants will be over dependent on our Gahmen for handouts. But the interesting part is why our Gahmen is never stingy when it comes to helping themselves to the taxpayers’ monies.
In this regard, do they ever realise that they are just being mere hypocrites !
Tan,
I like what you have mentioned in fact everything you said is very good and appealing. I don believe any you mentioned will be ever implemented by the current gahmen.
Problem: THE Gahmen is the biggest stumbling block to all you mentioned.
Long Term Solution (quite effective): Change the Gahmen if possible by voting wisely.
Short Term Solution (not/less effective): Write to forum, blogging, talk to MP, SPEAKER’s CORNER, give feedback to civil servants.
M.T.
Equal? What’s their of definition of equal? Government 99.99% – The People 0.01%
To them that’s equal.
Think about it. What legal and what illegal?
Legal = Government get $$$. Illegal = Government don’t get $$$
They give you money now, only to take back at least double the amount. And where all the money go to? I think you should know lah… Need to say out loud?
Well written article, with lots of valid points. Recently our MM mentioned that when he took over we had 100 million and now we have billions. He has set the yard stick, success is measured by the money you have. the well being of society has nothing to do with it, initially perhaps but now is it basically money. The ministers are assessed by GDP growth, does not matter if they make blunders. Ther are paid millions accordingly to the mantra that money is everything. but money for whom. 3% on CPF all these years while they have been earning and paying themselves millions. The citizens have been riped off. First world. Even Chile, Malaysia and several third world countries pay better returnd on compulsary savings. GIC makes 18$ and we get 3%. Now its our fault because we did not save enough for retirement. We paid extra for “subsidised” flats. In any country you can buy bigger better flats at freehold for lesser. Yet we think we are blessed. Dumb people we have been and so we are treated as such..we deserve this
Singapore is not known to be a welfare state and we don’t expect it to be. Most of us are given equal opportunities in education and standard of living and its up to us if we can succeed. Singaporeans know that the government will not help us unless we are seriously poor. That is why most of the Singaporeans work hard. This is actually a plus point.
I do not agree that a higher tax against the rich will do good to Singapore. It will only deter foreigners to come into Singapore, invest and do business here.
I do not agree that there should be minimum wages as it will eventually cause the cost of Living to go up because of the higher wages.
I do not like the idea that jobs are going to foreigners too easily. We welcome foreign talents, but pay them the same wage as a Singaporean and charge their employers a higher levy so that these companies will seriously consider if they can get the same talent in Singapore before they get it overseas.
If only the government can give back Singaporeans the returns GIC made using our CPF funds, that will do a lot of good to us. We had entrusted our Government with our monies into the CPF and we hope they can invest it as they are a pension fund manager for us. The 2.5% interest is far too low.
Adrian Khiat
http://akhiat.blogspot.com
I remember a senior official in charge of his country’s investment arm telling me that Singapore companies have NO MONEY. And the more I keep my small little business running, the more I realise he’s right. It seems to be a policy of the powers that be that the general population should never be allowed to get financially free – hence when the economy goes up, so do taxes and when it comes down – taxes remain the same.
Remember the saying – All of us are equal. Some of us are more equal than others. Hence, some of us are destined to rule, while the rest of the plebs should be content to be worker bees. Wo betide anyone who thinks that our economy can actually function without government intervention (history shows that most economies take off once the government gets out) and hence we will tax you for daring to suggest you can do better than us.
I do not agree the idea of imposing minimum wage. Imposing such measures will only make the labour market more rigid, and in turn make the economy less competitive. After all Singapore is still heavily dependent on foreign investments.
I support:
- lower tax and more subsidies for the lower income group
- higher tax for the higher income group
- imposing GST for property transactions
- lower corporate tax rate
- low or no minimum wage
Earlier, I had the impression that the tax on petrol is a percentage of the pump price. If the price of oil goes up, the tax also goes up.
I read in Today paper that the tax is 40 center per litre. It does not increase according to the pump price.
I checked the Internet and found the following FAQ from Shell’s website:
What is the retail price of fuel made up of?
The price of fuel at the retail station is called the “pump price” . It comprises the product cost, government excise and taxes, Shell marketing, distribution and retail share.
What taxes are applied to fuel?
Petrol – Excise tax of 44cpl is applied on every litre of petrol. GST is applied to all fuels (petrol and diesel) as it is purchased at the retail station.
I wonder what “cpl” stands for. I guess it must mean cents per litre. If this is the case, then the tax is a flat rate that does not change with the pump price. In other words, the Government does not collect more petrol tax when the price of oil goes up. They are likely to collect less tax, as motorists are likely to use less petrol.
On another matter, I think that the Singaporean habit of using abbreviations, such as “cpl” is quite bad and is confusing to the general public. They could have used “cents per litre” without lengthening the FAQ considerably.
Here is an extract from the Parliamentary Debate in 2005. The reply is given by Mr. Lim Hng Kiang to a question by Mr. Steve Chia.
Since February 2003, petrol duty has been levied as a fixed rate per litre. In
other words, petrol duty revenue depends on the volume rather than the price of
petrol.
The petrol duty is a tool to discourage the excessive use of cars and to promote
greater use of public transport. This objective remains valid despite the change
in petrol prices. There is thus no need to review the petrol tax. We must not fall
into the trap of adjusting tax rates every time there is a price change. We import
all the oil that we consume.
Rather than insulate ourselves from global price changes, we must learn to adjust our consumption in accordance with these price changes. This is the same with all goods and services – to let prices act as a signal of market demand and supply and to adjust our behaviour in response to these price changes. The fact that there is a tax on petrol should not make our response to price changes in petrol any different to that for other goods and services.
It appears that the increase in petrol price in recent months is due to the higher price of oil, and that petrol tax is not affected.
FYI, import duties in Singapore (petrol measured in dal or decalitre = 10 litres)
http://www.customs.gov.sg/leftNav/trad/val/List+of+Dutiable+Goods.htm
Problem of abbr applies in the above case to industry lingo or jargon. The writer or author is obviously not targeting the message at the masses.
btw, I received an unofficial response…
pay more income tax = earn more
pay less GST = spend less
minimum wage = work harder
higher interest rates = save more and learn to invest
On income tax, it might interest readers to note that the individual income tax collection will invariably increase. The reason is:
- Wage increases will happen.
- Income tax threshold are sticky (ie tax brackets are fixed).
- Reliefs are also sticky.
- So as time passes, more people will move up the tax bracket and hence pay higher rates of income tax. it won’t apply to the 21,386 persons (in 2007) who are already above the highest tax bracket though…
All you people are very naive. I mean, the only way a welfare state is going to work is that everyone who is rich enough is prepared to share a part of his/her wealth with the poor. The reason why this sounded reasonable in the past was that the rich needed the poor to lord over them and do their dirty laundry. But now, with globalization, you can always outsource your slaves and servants.
And the filthy rich in Singapore, which include many middle class Singaporeans driving their BMWs, many of them are really filthy in their manners. They will always clamour for getting their fair share of the pie. And they know the tricks too. Mr Tan should know this well, after all, this was what happen to the recent motor insurance debacle.
So a welfare state will not work here, because of the lousy and pathetic attitudes of Singaporeans and PRs alike.
the gist of my article is “tax people according to their income” but “distribute the social benefits fairly and equally”.
I find it difficult to pass the judgement on who should be entitled or denied the social benefits, according to their type of housing or ability to “prove that they are poor.”
Sometimes, I am puzzled at why my fellow Singaporeans are so good at making these kinds of value judgements. It must be the result of our education system.
Using type of housing is convenient. In the examples you give, the owners or renters of the private property has a choice to downgrade and unlock their property’s value.
If you want fairness, you need some sort of a declaration model that allows the Government to know your networth.
For example, you allow the Government to know your bank account balance, your investment portfolio, your income (they already know this, but they still need permission for this purpose), the properties that you own and expensive goods (such as cars). The Government will then work out how much to give you.
You may choose to keep some parts secret, like your investment portfolio. However, it means much less rebates will be given to you.
Note that you don’t give the Government the information yourself. You give them permission/authorization to find out these information from various sources.
I tend to distinguish between subsidies and social benefits, to some extend, in the following way:
* Subsidies are meant to provide a need at a lower cost. Examples of needs, include medical care and education.
* Other social benefits aims to improve the qualify of life of the general population. Examples includes better transportation and a more beautiful environment. But I have to admit that there are some fuzzy areas, like good education.
Noone, rich or poor, should be denied of basic needs. But the poor should be entitled to them at lower costs because they need it, not because they, by virtue of being poor, should get a larger share of the fiscal budget or more benefits. Everyone should have equal benefits and opportunities.
For example, both the rich and poor must be able to have very specialized medical care if required. But poor should pay less. Everyone should be able to attend the very best school (as long as he or she qualifies), but those who can’t afford should pay less.
Therefore, I support the principle of means testing. My main concern is whether it can be implemented effectively and efficiently. If it can be done, I urge everyone to support it. If it doesn’t, I hope that the Ministry is willing to let it go.
I wish to say a few words on why there should be a minimum wage. It is necessary to ensure that the weakest members of our society, i.e. the poor and lower educated, are given a wage that is sufficient to meet the cost of living and raise a family. They should not be required to work 12 hours a day or two jobs, just to earn enough.
Most countries in the world has a minimum wage, including the low income and high income countries. Even the USA, which is the worlds biggest proponent of the free labour market, has a minimum wage.
A minimum wage may not increase the business cost significantly. It just reduces the huge profit earned by the business owners, salaries of the top management and the rental costs. The share of business cost of the minimum wage earners is probably not significant, except for labour intensive industries.
There is less economic pressure for a minimum wage policy in a big country. If necessary, a person can move to live in a low cost part of the country. Some people can go back into farming, for example.
But in a small country like Singapore, the choices are limited. So a minimum wage policy is necessary.
The argument against a minimum wage is that it will drive jobs to other countries. Let us look at the facts. Are our jobs going overseas? Hardly!
We have the opposite situation. Many jobs are created in Singapore, that have to be filled by low wage workers from other countries.
I am surprised at the large number of these foreign workers. They increase the demand on our public infrastructure and facilities and increase the congestion in Singapore. Is this good for Singapore?
These low cost foreign workers compete with our local workers. Many of our local workers cannot find jobs and have to be unemployed. The unemployed are criticised for being “choosy”. Is this true? Many of our elderly are willing to take menial jobs as cleaners just to survive. I respect them. I hope that we can give them a decent wage for their work.
We must remember that there is a high cost of living in Singapore. The cost is higher, if the worker has a family to feed. We cannot expect them to accept the lower wage that is adequate for foreign workers who feed their family in a low cost country.
I agree with Ben.
Removing healthcare subsidy for rich people doesn’t mean denying access to basic healthcare. In UK, rich or poor have free access to healthcare.
For me, if means testing affects whether rich people should pay for any service = ok. If means testing affects whether service is provided or not = not ok.
If hospital say ward class B2 only for poor people, rich people cannot stay, then wrong. If hospital say ward class B2, rich people pay full rate, poor people pay full rate = fair. But if Govt want to help poor people pay part of full rate = good. But if Govt want to use public money to help rich people pay part of full rate = not so good.
I think Kin Lian also raises a good point. Hospital shouldn’t charge super high rate for rich people just because they can afford to pay more. I think hospital rates should be benchmarked to demonstrate that prices are indeed reasonable market rates. This is not addressed.
The worry is means-testing means hospital will set much higher full rate to support that Government give very high subsidy. Then that affects whether service is provided or not = not good.
Now doctor happy cos medical council no longer control price. Will that become an issue? The middle class worry cos they are the worst hit. No subsidy & cannot afford.
Sorry, the good point that Kin lian raised is that poor people don’t like to be called poor. Some people’s face = more important than life. If they have to declare poor then only get subsidy, then some people will not to see doctor because cannot afford full rate. Like that, the poor only suffer if means testing in place. I agree with this but I think also it can be managed. Its not like Govt don’t know who is poor and who is not.
I think those who can afford private house = not poor. Can always sell, stay in HDB. Yet, as above, some people’s face = more important than life. This type of face protection, I think we can ignore.
Also, from an insurance standpoint, rich people will be happier with means testing. Rich people buy medical insurance = payout more. Middle class buy medical insurance = payout less. Very few poor pple buy medical insurance. Now insurance premium is the same for all.
The question is: will insurers adjust premium when means testing come into play?
btw, I don’t sell insurance or work in the insurance industry.
The Philiipines Embassy & Indonesian Embassy imposed minimum wage income for their domestic helper and this measure did not reduce the number of domestic helper working here. Our Garment will not impose minimum wage income for our workers because this will reduce foreign workers employed thus hurting their tax collected on foreign workers. Our ministers will adopt those policy which will add monetary value to their department. We will not have much chance to voice up or vote with our feet because majority of the votes will be a walkover. I have voted only once for the past 47 years – the rest is walkover!!!
Tan Kin Lian on June 4th, 2008 6.38 pm A few people have commented, “this is a good idea, but the Government will not agree”.
I suggest that we express our opinion. I hope that more people can come forward to say that they like higher income tax and lower GST. Or that there should be a minimum wage. Or that interest rate should be increased.
We can let the Government make their decision separately. Let us take one step at a time
Be very careful , our government will most likely accept suggest 1 and reject 2 and 3 and then claim that they implemented at least 30 % of your suggestion….
I absolutely agree that the low-skill workers are hit the hardest in times of economic downturn or restructuring. And I hope that measures can be taken to improve their life. Imposing minimum wages does immediately increase the income of low-wage workers. At the same time, I don’t wish to see policies that sooth the hearts but are not sustainable, or worse still, detrimental. Once such a mistake is committed, revoking it is both painful and unpopular.
Firstly, imposing minimum wages makes the labour market less efficient. In other words, if a business entity has to pay more than what a worker is worth, then additional costs has to be passed onto the consumers, or excess workers have to be laid off to reduce business costs. This applies to both low and high wage labours. Rigid labour regulations hurt businesses and they in turn hurt the economy and everyone in the longer run.
Secondly, increasing the labour supply, for example by importing foreign workers, does reduce wages. However, whether the alternative of barring foreign worker is better is still questionable. Both cases are economically equivalent if the productivity and the quality of work remains the same, i.e. it is detrimental to have a protectionist labour policy at the expense of quality and quantity of work.
I’m not entirely sure of the whole picture. I have the impression that we can hardly replace many of the low-skilled foreign workers. Most low-skill foreign workers around me are construction workers, domestic maids, and cleaners. (I don’t consider healthcare workers as low-skilled labours since they require at least a professional diploma degree.) I already see that there are many senior citizens working as cleaners. I kind of feel that locals aren’t particularly attracted to work as domestic maids given how demanding we are towards our maids. Also, the construction sector doesn’t seem to be an popular industry, and it is definitely not suitable for senior citizens.
I have to admit that this is a particularly difficult problem to tackle.I hope we can brainstorm more ideas, but I certainly do not advocate imposing minimum wage before due consideration.
I get a nasty feeling that the low interest rate in Singapore is due to the inflow of money from rich people around the region, who like to put their money in this safe haven.
With too much money in Singapore and too little investment opportunity, interest rate remains depressed. This is a disadvantage to the local people, who get a low interest rate on their savings. The interest rate cannot keep up with inflation.
Even government bonds pay interest below inflation rate.
I hope that some economist can make a study into this situation. Does it help Singapore to haev a lot of money parked here? Or is it just being wasteful, as the money is not being put to good use. Is it detrimental to the citizens?
To add to my previous posting.
Another source of inflow is from the foreign investors who are encouraged to bring their money into Singapore under some tax incentives arranged through EDB.
Are we getting too much money that is not required to be used in Singapore?
Good point. Deposit interest rates are at an all time low.
http://www.nationmaster.com/time.php?stat=eco_dep_int_rat-economy-deposit-interest-rate&country=sn-singapore
Govt encourages fund flows into Singapore to build up the fund management industry.
The question is whether such funds are channeled into the loan sector and affect the lending rate. Banks justify their high lending rates by saying this follows global interest rate hence the widening gap between lending and deposit rates. How true this is, I leave it up to the MAS. What I do see is higher loan rates and historical lows for deposit interest rates.
However, I don’t see how such flows can be reversed without affecting the fund management industry.
There is however, a point that many miss. Whilst foreigners are not restricted from bringing funds into Singapore, neither are Singaporeans restricted from investing overseas.
For myself, I think Singaporeans should learn to invest outside of Singapore. Singaporeans aren’t taxed on overseas income (unless remitted and even then there are certain exemptions). If one can manage the overseas taxes and exchange rate risks, one can achieve far greater returns then <1% deposit rates.
So its not so much a question of too much money in Singapore but not enough Singapore money going out.
Good point. Deposit interest rates are at an all time low having dropped from 10.71% in 1981 to 0.44% in 2005.
Govt encourages fund flows into Singapore to build up the fund management industry.
The question is whether such funds are channeled into the loan sector and affect the lending rate. Banks justify their high lending rates by saying this follows global interest rate hence the widening gap between lending and deposit rates. How true this is, I leave it up to the MAS. What I do see is higher loan rates and historical lows for deposit interest rates.
However, I don’t see how such flows can be reversed without affecting the fund management industry.
There is however, a point that many miss. Whilst foreigners are not restricted from bringing funds into Singapore, neither are Singaporeans restricted from investing overseas.
For myself, I think Singaporeans should learn to invest outside of Singapore. Singaporeans aren’t taxed on overseas income (unless remitted and even then there are certain exemptions). If one can manage the overseas taxes and exchange rate risks, one can achieve far greater returns then <1% deposit rates.
So its not so much a question of too much money in Singapore but not enough Singapore money going out.
The money may not just be from the region. Don’t forget the town councils’ funds. Are there other entities can hold onto surplus funds? These act as sponges to soak up cash from the people.
If my memory serve me right, The gahment had a budget surplus of $20B a year for a few year. Sadly, any policy that smell like or look like social welfare do not have a chance to see day light. MM Lee is totally against any social welfare policy. His view was well documented. The poor, the aged, the economically disadvantaged just have to tough it out on their own and if they were lucky maybe some NGO may be able to help. Singapore have a aging population and those who are self employed e.g a street vendors, food sellers etc. without CPF or saving will have a hard time in old age. To create a harmonious and caring society the state must be prepared to step in to look after those who had fallen on hard time, either due to old age or lost of employment. Singapore is rich enough to look after its disadvantaged population. Regretabily, it is gahment policy not to create a dependence culture that stop it from doing the right thing.