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Why are there policies that distribute government expenditure to help the rich more than the poor?

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SINGAPORE — Terry Xu asked me a very interesting and intriguing question — Are there policies that help the rich, more than the poor?

Well, arguably, here are some examples:

1) Working Mother’s Child Relief

So, for a lower-income working mother, the relief may be of no use at all, because she wouldn’t have to pay any tax or hardly any tax, in any case.

For example, a working mother with an income of $30,000, and 3 children, would not have to pay any tax.

In contrast, a working mother with an income of $100,000, and 3 children, would have her chargeable income reduced to $70,000.

So, richer mothers benefit more, relative to poorer mothers.

In summary, what this may mean is that it may be discriminatory to those women, and consequently, their children, who do not earn enough to pay any or very little income tax, as they do not benefit from the above procreation tax benefits.

For the rich, the higher the income, the greater may be the procreation tax benefits.

Why not just give the same benefits to parents, regardless of their income? After all, I understand that about 40% of Singaporeans do not or hardly pay any income tax.

In this connection, 680,900 resident workers earn less than $2,500.

The labour force participation rate for females is 63.4%. https://www.singstat.gov.sg/find-data/search-by-theme/economy/labour-employment-wages-and-productivity/latest-data

With our TFR at its lowest ever – perhaps we should consider what other developed countries do – and that is to distribute procreation benefits equally, without any discrimination by virtue of the women’s economic status.

The notion that giving more financial incentives to the higher income and educated, may be “statistically” flawed.

Statistics have always indicated that the lower-income and lower-educated are the ones who may tend to procreate more.

If you are a lower-income women’s family, the benefits may make a world of difference. But, if you are highly paid, how much more motivation is there for you to procreate by dangling more financial incentives?

How can the principles and ideals of meritocracy be truly procreated when our procreation incentives are so lob-sided that they pay out, as I understand it, historically, a few times more for procreation tax benefits vis-a-vis non-tax-related procreation benefits?

For illustrative purposes only – if the sum total of procreation tax benefits is $8 billion, like the working mother’s tax relief – wouldn’t it be fairer, more equitable and effective, to distribute it equally to mothers, regardless of their income?

In the final analysis – this is a policy that distributes government expenditure or benefits, which are, after all, taxpayers’ money, that belongs to all taxpayers whether rich or poor, more so to help the rich, relative to the poor.

2) Discrimination against lower-income?

Are we discriminating against lower-income families and contributing to inequality and discrimination against lower-income women by having schemes like the Child Development Account in its current form?

I refer to the article “Parents of 4 in 10 firstborns have benefited fully from CDA” (Straits Times, May 21, 2018).

It states that “A Ministry of Social and Family Development spokesman told The Straits Times that 42.1% of firstborns since 2016 – the First Step grant was started in late March that year – have hit the maximum government matching contribution. For the second child, the figure is 35.8%, and it is 10.9% for the third, 4.8% for the fourth, and 1.2% for the fifth child and beyond.”

As to “For the 2011 birth cohort, which hit its halfway mark for saving last year, 71.2% of the firstborns have received the maximum government matching contribution, and it is 66.6% for the second child, 38.8% for the third, 23.7% for the fourth, and 9.8% for the fifth child and beyond” – why is the subscription rate apparently quite low?

Isn’t it arguably, a no-brainer to contribute because of the matching grant?

After all, “the money in the CDA can be used for childcare fees, medical expenses and more, at approved institutions.

In the year that the child turns 13, the unused funds in the CDA go into the Post-Secondary Education Account (PSEA) under the Ministry of Education (MOE).
When the account user turns 30, the unused money goes into the Central Provident Fund (CPF) account”.

Is the primary reason for not contributing due to the financial difficulties of the parents?
Why do we continue to have such a scheme which may arguably contribute to greater inequality and discrimination against women by virtue of their economic status?

This is also a policy that distributes government expenditure or benefits, which are after all taxpayers’ money, that belongs to all taxpayers whether rich or poor, more so to help the rich, relative to the poor.

3) HDB: Rich get $190k grants, poor get $80k?

The maximum housing grants for Built-To-Order (BTO) HDB flats is $80,000, and it is income means-tested – household income not more than $1,500 to get the maximum $80,000.

In stark contrast, the maximum grant for resale flats is now increased to $190,000, and there is no income means test – only that the income ceiling cannot exceed $14,000.

Why are we giving more help to, arguably, richer people, to buy more expensive resale flats, relative to poorer people who may only be able to afford BTO flats?

Also, is it arguably, fair or equitable to have public housing policies, that enable richer people to buy immediately (with up to $190,000 grants), whereas the poorer people may have to ballot (and have to be means tested to determine the grant amount) and wait 4 to 5 years for a flat?

This is also a policy that distributes government expenditure or benefits, which are after all taxpayers’ money, that belongs to all taxpayers whether rich or poor, more so to help the rich, relative to the poor.

Are there any developed countries in the world. that has so many policies, like the above, which arguably, spends government expenditure or benefits, to help the rich more than the poor?

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Opinion

Iswaran unlikely to serve full 12-month sentence under conditional remission and possibly home detention

Former Transport Minister S Iswaran is unlikely to serve the full 12 months of his sentence. Under Singapore’s Conditional Remission System, he could leave prison after serving less than eight months, with the remainder of his sentence served under strict supervision, including home detention. While Iswaran is scheduled to surrender on 7 October 2024, there is a possibility of an appeal.

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Former Transport Minister Iswaran was sentenced to 12 months in prison on 3 October 2024 for accepting valuable gifts while in public office and obstructing the course of justice.

The court granted Iswaran’s request to surrender himself at 4 p.m. on 7 October 2024 to begin his sentence. However, his lead lawyer, Davinder Singh, indicated that the start of the sentence could be delayed depending on “instructions,” hinting at the possibility of an appeal.

However, despite the 12-month sentence, it is highly likely that Iswaran will serve less time in prison due to Singapore’s Conditional Remission System (CRS) and potentially the Home Detention Scheme (HDS).

Under the CRS, prisoners in Singapore may be released early if they demonstrate good behaviour.

Typically, under the CRS, inmates are eligible for release after serving two-thirds of their sentence. In Iswaran’s case, this means he could be released after serving eight months in prison, with the remaining four months of his sentence subject to a Conditional Remission Order (CRO).

The CRO, a legal mechanism that enforces strict conditions post-release, requires compliance with several terms, such as reporting to authorities and avoiding any criminal activity. If Iswaran violates these conditions, he could face penalties, including being sent back to prison to serve the remainder of his sentence.

Alongside CRS, there is also the possibility that Iswaran could serve part of his sentence under the Home Detention Scheme (HDS), which allows prisoners to serve their final months under strict supervision at home.

Take the case of former Singapore Civil Defence Force (SCDF) Chief Peter Lim Sin Pang, for example.

Lim was sentenced to six months in prison in 2013 for corruption.

After serving three months in Changi Prison, he was supposedly placed on home detention for one month — if we consider how CRO grants him two months of remission — allowing him to complete his sentence under supervision.

Home detention meant that Lim would spend his remaining sentence at home under electronic monitoring, fitted with an electronic monitoring device, typically worn as an ankle bracelet, which allows authorities to track his location at all times.

Like other inmates under the HDS, his movements were tightly controlled, and he was allowed out only for specific activities, such as attending work, medical appointments, or rehabilitation programmes, during limited hours.

Any deviation from the permitted activities or failure to return home on time could lead to immediate consequences, including being returned to prison to complete the sentence.

Eligibility for home detention depends on various factors, such as the inmate’s behaviour during incarceration and the level of risk they pose to society.

This scheme aims to reintegrate prisoners into society while maintaining strict oversight.

If HDS is applicable, Iswaran might spend even less time behind bars, as he could transition to home detention before completing the full period under the CRS.

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Opinion

Why the silence by Minister Shanmugam on his S$88 million property sale?

Despite being quick to rebut allegations, Minister K Shanmugam has remained silent on the S$88 million sale of his Good Class Bungalow (GCB) in August 2023. The lack of public commentary, especially given the potential conflict of interest with the Singapore Land Authority’s role, raises questions.

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When it comes to addressing allegations, Minister for Home Affairs and Law, K Shanmugam, has shown he can respond swiftly and decisively, as seen in his and Dr Vivian Balakrishnan’s rapid legal actions against Mr Lee Hsien Yang (LHY) for defamation, as well as their recent rebuttal to LHY’s statement regarding the defamation costs paid to the two ministers.

However, the stark contrast in how Mr. Shanmugam has handled recent revelations about his own financial dealings, and his silence regarding the S$88 million sale of a Good Class Bungalow (GCB), is puzzling and raises concerns about transparency and potential conflicts of interest.

TOC had earlier disclosed that Mr Shanmugam sold his GCB at 6 Astrid Hill for a staggering S$88 million in August 2023.

The sale was to UBS Trustees (Singapore) Ltd, a transaction managed by legal professionals from his former law firm and concluded without any encumbrances like a mortgage. This deal turned a home bought for S$7.95 million into an S$88 million sale—garnering a massive profit.

This sale was made just a month after he made his ministerial statement explaining the circumstances of his leasing of the massive black-and-white bungalow estate at 26 Ridout Road from the Singapore Land Authority (SLA), a statutory board that he oversees as the Minister for Law.

This transaction, particularly the identity of the buyer and the approval process for such a high-value sale, is of public interest because GCBs are subject to stringent sale conditions.

They are generally only sold to Singaporeans or approved Permanent Residents who have made significant economic contributions to Singapore. The approval for such transactions typically comes from the SLA.

This raises an inherent question: Why has Mr Shanmugam not addressed the public regarding this substantial financial transaction, especially when such approvals could potentially involve his direct oversight? We have written to him for his comments but were met with silence.

We do not know who the actual beneficiaries of the property are, as it was sold to ‘The Jasmine Villa Settlement,’ a trust managed by UBS Trustees. The beneficiaries could be Singaporeans, foreigners, or a mix of both.

His silence is notable because it contrasts sharply with his and other ministers’ rapid responses to allegations made by LHY.

The potential conflict of interest in the sale of the minister’s GCB is similar to earlier concerns about his rental of a black-and-white property at 26 Ridout Road, which also involved the SLA from which he has said to have recused himself from decisions made. Notably, the government has also cleared him of any wrongdoing.

The lack of public commentary from Mr Shanmugam about the sale of his GCB, despite the potential need for SLA’s approval, and the silence from the mainstream media on this revelation, merit scrutiny.

The public deserves to know:

  • Who was the buyer and, if the buyer is a non-Singaporean, who approved the sale to UBS Trustees and under what criteria? Especially since GCBs can only be sold to Singaporeans or Permanent Residents who have not only been resident in Singapore for over five years but have also made exceptional economic contributions—a criterion subject to the subjective approval of the authorities.
  • Was there any conflict of interest given the minister’s role over the SLA? This is particularly pertinent given that the SLA, which falls under the purview of the Ministry of Law, would typically be involved in approving such transactions if the buyer does not meet the usual criteria. Moreover, given the huge sum involved in the transaction, extra scrutiny is warranted, especially as Mr. Shanmugam is a public servant holding significant power.
  • Why has there been no public statement from Minister Shanmugam on this matter, especially given the rapid response to defamation accusations? His silence contrasts sharply with his prompt responses to other public issues, raising questions about consistency and transparency in handling personal financial dealings versus public allegations.

Minister Shanmugam’s transparency in this matter would reaffirm public trust and ensure that his actions as a minister do not conflict with his personal financial dealings.

His response, or lack thereof, will significantly influence public perception of his commitment to transparency and accountability in his official capacities.

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