Leong Sze Hian
Six months after the last general elections in 2006, Prime Minister Lee Hsien Loong dropped a bombshell on Singaporeans. In November of that year, PM Lee announced in Parliament that the Goods and Services Tax (GST) will be increased from 5 per cent to 7 per cent. He explained the rationale for the 2 per cent increase thus:
“It will give us precious extra resources to implement social programmes like Workfare later on. Our aim is to help the lower income groups and the elderly, not to increase their burdens…. It is a whole set of measures which we are taking in order to tilt the playing field in favour of the lower income group, which is what we have to add and tally in the balance, and my purpose is to help the lower income group. For the middle income, it will be generally about ok; for the higher income, I think the higher income should end up paying more overall. (Source)
The GST hike was eventually implemented in 2007.
In his Budget Speech the following year (2008), Finance Minister Tharman Shanmugaratnam revealed that the GST collected in 2007 had “exceeded our projection by about $1.2 billion, mostly from higher consumption.” http://www.mof.gov.sg/budget_2008/speech_p1/p1.html
It’s been three years since PM Lee’s bombshell and Singapore has gone through what is arguably its worse recession. Thus, it may be an opportune time to ask how exactly have the poor been helped with the increase in the GST.
Can we have an accounting of how exactly the estimated $1.9 billion extra from the two per cent GST increase has been used to help the poor?
How much more exactly has the increase in GST raised?
Are the poor better off after getting the extra help from the GST increase?
Since we don’t have detailed answers to the questions, we can only speculate, using statistical indicators available in the public sphere.
Comcare
The core scheme to help the poor, is ComCare.
In a Channel Newsasia report in August 2009, the Comcare fund, which now stands at $800 million, will eventually be topped up to $1 billion.
Comcare spending this year is projected to increase by 37 per cent from 2008, to $77 million. As of end-June 2009, some 27,000 were receiving help from nationwide Comcare schemes.
Comcare has helped over 85,600 cases since its inception in 2005.
Does the above mean that there are only about 27,000 poor families receiving financial assistance, and that 58,600 (85,600 minus 27,000) cases that were helped no longer need assistance?
According to government figures, there are 105,965 and 116,092 households with monthly income below $1,000 and $1,000 – $1,999 respectively (Department of Statistics’ Household Expenditure Survey Report 2009). The Ministry of Manpower said recently that the seasonally adjusted figure for unemployed residents was 100,300 in September. The question is: In light of the above data, how is it possible that there are only 27,000 families that need financial assistance in the midst of Singapore’s worse recession?
Public Assistance
The number of people on the Public Assistance scheme has remained at about 3,000. About 50 per cent of new applications was rejected last year. The monthly allowance for those on the PA scheme has been increased by just $30, from $330 to $360.
Post-GST increase, how much of the Progress Package represents an increase to help the poor, that is on top of the amounts given in the past before the GST increase?
We should also note that the GST Offset Package may only help the poor to offset the GST increase, and thus may not represent more help for the poor arising from the reason given for the GST increase.
Medifund
According to the article, “More Medifund assistance” (ST, Feb 9, 2009), Medifund assistance will be raised by only 10 per cent to $80 million, and Medifund and Eldercare Fund will be topped up by $100 million each.
It should be pointed out that topping up the Comcare, Medifund, Eldercare Fund, etc, is not actually money being spent. The budget for these are instead set aside as endowments. That is, these funds will invest the monies and may only use the interest from these funds to help the needy.
The effective measure of help for the poor should be the actual sums spent every year, relative to the extra sum collected from the GST increase.
MOE, Workfare
The Ministry of Education’s (MOE) budget for the MOE Financial Assistance Scheme (MOE FAS) will increase by an estimated $7.3 million, from $10.7 million in 2008 to $18 million in 2009 (Source : MOE press release, February 10, 2009).
The Workfare Income Supplement (WIS) for Older Workers was increased, and will cost the Government an additional $83 million a year bringing the total WIS budget to $432 million.
Since the Workfare Bonus scheme started in 2006, before the GST increase, the question that needs to be asked is how much of the GST increase has gone to the increase in workfare, on top of the sum before the GST increase?
In 2008, after the GST was increased, the government saw a budget surplus of $6.4 billion. It thus begs the question of whether there was a need to increase GST in the first place.
Finally. we would like to suggest that an accounting be given every year, as to how exactly the extra money from the GST increase has been used to help the poor, and re-visit the following seven questions:
- How many poor people are there?
- How many poor people will be helped?
- What is the definition of being poor?
- Will more poor people receive help?
- How much more help will the poor get?
- How exactly will the poor be helped?
- How much more will the increase in GST collect?
In so doing, it may facilitate all stakeholders in their analysis and review of policies, to ascertain the effectiveness of the basic premise of raising the GST “to help the poor”, as PM Lee said.
*Additional contribution by Andrew Loh.
*Picture from Straits Times.
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Singaporekia @34
////”Govt should focus on the economy and focus on how to make everyone contribute more, so increasing the GST from 5% to 7% is not at all bad.”///
- Is that all a Govt needs to do? Just open the land (or legs) for investors (or pimps) to come and grow the economy, and just make you & I contribute more. You conveniently omitted to mention contribute to who or for what? Don’t you understand this article is about the shortcoming in distributing the revenue? Yes, increase the wealth of the nation but for who to enjoy? Who?
///”A good govt should try to make the pool of poor smaller and not trying to help the poor directly by making them pay less for everything.”///
- Your simple mind must have told you that poverty equates laziness. Can poverty not be due to old age without employment and no pension, disability and not able to work, illness and not able to work, young infant children who needs 24/7 care, etc? With zero income and dependents to care for, even making them pay less for everything is too much!
- Be careful what you wish for as it might be your family who need handout next unless you are one of the Mini-stars. No one can guarantee you will never fall ill or become disabled or have intellectually disadvantaged children unless you are God.
///”Those with an opposition mentality always want the poor to pay less and if the pool of poor is getting bigger they get more votes, the poor will be pushed to a corner by the opposition eventually if they get to rule.”
- I want the poor to be genuinely helped. Does it mean I have an oppo mentality? The poor are already ‘pushed to a corner’, worse they are condemned by the PAP. For the poor to vote the opposition, it is a no brainer – they are not risking anything my dear.
We the citizens are the “natural resources”. We are the “cash cow”. They “milk” us from GST, HDB, COE, ERP, IRAS, RADIO/TV license, Property tax, Income tax, SC&C, Utilities. Now go up roof garden at Pinnacle also “milk”. “Milk” already milk go where? Help China built schools, roads, give China Chinese student money to study here. While our students here can hardly afford to buy books, uniforms and even food during recess time.
[i]Carol on December 21st, 2009 7.20 pm Don’t buy lor.
Buy essentials lor.
Schools must have, transport system must have, polyclinics must have, public servants must have, flats must have, water must have . . . . . .
Who pays? Santa Claus?
Taxation lor.
Hey Singapore got no oil, mineral resources, no plantations, etc., leh. Just the PAP leading 4.5 million people lor for the pst 45 years.
Use brans lor.[/i]
so you never shopped @ all
without a doubt you are a 101% splintster..
too ugy to get married or is your lips too WIDE?
you here says singapoor got no minerals sands or salts
yet the ministers paid themselves more than 5 digits/month…
you didn’t openned your big fat lips and shout why must you ministers have so high salaries?
than again a bimbo liked you sureLEE have no brain @ all
The per capita GDP for Singapore, from the Singapore Department of Statistics, is shown below, for the ten years to 2008. The per capita GDP in 2008 was S$53,192 ie the total wealth created in Singapore in 2008 amounted to $53,192 per person (man, woman and child, AND all foreign workers – everybody). If we took the foreign workers out of the equation the per capita figure would be $78, 330 ie Singapore is a SUPER rich country, not just rich.
1998 $35,115
1999 $35,371
2000 $39,683
2001 $37,088
2002 $37,874
2003 $39,463
2004 $44,487
2005 $47,192
2006 $50,244
2007 $54,834
2008 $53,192
So, where does the wealth created go? Food for thought!!
In 2005 there were 4,013 households with 4 or 5 persons (or 18,000 persons using the average of 4.5) living in 1 and 2 room HDB flats. There were 708 households with 6 or more persons (or 4,248 using just the minimum of 6) living in 1 and 2 room HDB flats. All this in a country with a per capita GDP of $53,192.
And, as Sze Hian points out, over 220,000 households (or nearly 800,000 persons, or nearly a quarter of the resident population, using the average household size of 3.5) are in HOUSEHOLDS which earn less than $2,000 a month. One can almost be certain that the proportion of citizen households earning less than $2,000 a month would be higher than that of the permanent resident household.
Totally awesome how he can describe a regressive tax as ‘for the poor’. I might as well don a tiara and ask a battery of television cameras for World Peace. Reminds me of this fine image:
http://img.moronail.net/img/8/5/1085.jpg
“54) Die-Hard Singaporean on December 23rd, 2009 8.50 am The per capita GDP for Singapore, from the Singapore Department of Statistics”
oh! that’s where these wonderful numbers come from.
hmmmmmmmmmmmmmmmmmmm…..
When foreigners cite the place as having Transparent system does it mean
the Answers to ALL questions from “F1 or F9″ and what are posted here are already publicly available somewhere out there?
Foreigners, over to you.
Tilt the playing field in favour of the lower income group? Since when our PM
became so generous and considerate? There is no playing field for the poor to play with in the first place, never mind the tilting and all the bulls!
Take for example the plight of the disabled, they have been fighting for the transport concession for 10 long years! Mind you they are asking for CONCESSION and not FREE, and yet what have you as PM done to this group of
underprivileged? Are they not on your priority list? They have been waiting for not 1 not 2 but 10 long years! If this group of people is not under your radar, we see the poor in Singapore better not to pin so much hope for whatever promise you handed out!
SAF Regulars – lower pay… Do you know that the career lifespan is in the Army is shorter than may of you along the streets… Many after they retire, they struggled. If you do not pay a little more, you do not get good people joining and our Defence will be weaken. If you still don’t feel shiok, then join the SAF as a Regular. If you are one with the attitude, I’m sure you will excel. Unless you are one who likes to sit and type in TOC silly remarks and exposing yourselves and telling people that you are empty in the head!
Poor getting help? Have you ever meet the self – claimed poor Singaporean who are always asking for help? Some are real lazy… Some are still searching for their brain (quit their job because they just simply dislike the boss, and yet has a family to feed), and expecting the Govt to feed them… The entire Nation will only improve if everyone strive to improve themsleves… Go study the subject called economics. It says the wealth of a country = productive of the people (not Govt giving money). Only when every Singaporean strive to improve themselves then they will get their quality in life.
Also have you got any knowledge that in some european countries / Australia etc; has much much higher tax that where you are living in? Are you only looking at their social welfare and benefits? At lease in Singapore you work hard, you get back from your blood and sweat… In those countries (in which many of you are trying to ask for – having great social welfare / benefit – i.e. Jobless you get allowance, wonderful elderly care etc.), they can possibly tax you up to 50%… Wake up! Can you get motivated people in the workforce if half their salary goes to the bums who sits at home and remain jobless and waiting for the Government to feed… Sit back and have a deep thought about this. Merry Christmas!!!
#59, kiasu.n.kiasi
The retirement age of SAF officers has been extended to 50 and after they retired, they will get at least $500k for retirement,. For those under Military Domain Expert Scheme, the retirement age is 60. Hence, it is not justifiable to say that becos the SAF has a short career span, they should be paid more, since now their career span is now similar to civilians. However, their pay is still much more than the civilian sectors! The more they are paid, the more the civilians has to fork out the taxes to pay them in the form of higher GST!
If you said that many of the SAF regulars struggled after they retired, you ought to know that many Singaporeans are already struggling even before they retired! At least the SAF regulars still has their hundreds of thousands of dollars in their bank account even though they said they struggled!
The defence of Singapore will not be weaken even if the pay of SAF regulars are cut, becos the NSmen and NSF’s commitment to defence of Singapore will be strengthen, becos with a lower cost of living with a reduction of GST or channelling of public funds to healthcare and education, Singaporeans will feel the worth of defending a country they can be proud to call theirs! Now, the foreigners had already captured the jobs and HDB flats of Singaporeans and the SAF cannot defend the state. The threat to natioal security is not in the military dimension. The threat to national security is now in the economic, in the form of high GST, lost of jobs and HDB flats to foreigners! Also, the threat of terrorism and H1N1 has also posed internal and public health threat to Singaporeans! That’s why the Reform Party is right that defence spending should be cut, so as to reduce taxes, and spend more on healthcare and education and restrict foreign workers!
Actually, GST does not really harm the poor, since they get back what they paid in GST credits. The people it really affects are middle income, rich and tourists.
The middle income is affected, but if we think of the relatively small % of consumption of our spending (we are afterall a savings country) and offsetted by the GST credits, the effects are considerably less.
The main people it affects are the rich and tourist.
Rich because we are doing a sleight of hand- we reduce income tax to make us look attractive but we tax them when they wine and dine in sg.
But most of all, it is the tourist that pay more. As Singapore moves towards a more service orientated economy, gearing up for teh tourism sector, we need to raise revenue from here too. In teh past, they don’t pay any taxes. But now , with GST they have to contribute taxes too.
Trust between the government and the people is the key to everything. If a government says thing that does not match what is really happening, the trust is gone and it is extremely hard to mend.
No amount of sweet talk or lessons can makeup the difference. It is not that the people does not know the difficulty of governing nor does not wish the country to succeed and prosper. They are worried and suffer in silent. It is a race where a lot of people are being left behind, they will feel the race is unfair.
Let’s hope those PAP MP or ex MP, who does not agree with the way PAP is now operating could come out of PAP and rise up for your people once again. They could form a new party or join opposition party to take on the PAP for goodness sake.
Singapore needs alternate government, ready to step into the governing shoe. Now the wind of change is likely to fill the air, those who could make it may just miss it and next time it won’t be so easy anymore.
The difference between the number of people considered to be poor in Singapore and the number of people who’ve received or are receiving financial assistance could be due to a lack of awareness of financial schemes as well as a lack of knowledge of how to apply for these schemes. Also, we have to consider that the poor may choose to receive help from religious groups, charity organizations and friends, etc., rather than from the government.
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