SINGAPORE: Shortly before Deputy Prime Minister Lawrence Wong announced the National Budget on Friday (Feb 16), Workers’ Party MP Jamus Lim (Sengkang GRC) weighed in to remind everyone of where funds come from and to where it should go.
With higher prices due to inflation, tax receipts have risen as well. Greater collection of taxes means that there is more to go around, and to withhold this would be equal to a “a stealth tax increase,” he wrote.
In a Facebook post, the MP, who is an Associate Professor of Economics at ESSEC Business School, pointed out that the packages that have been announced aren’t “entirely surprising” and explained why.
“Taxes are typically collected as a percentage, and as inflation has bumped up the prices of everything, it’ll automatically boost tax receipts, too,” he wrote, reminding everyone that “it’s not out of government largesse that these packages are being rolled out.”
He further pointed out that “Not rebating these surpluses would amount to a stealth tax increase, which is a terrible thing to do when the economy remains weak.”
“So it’s not so much about the ‘giving-chicken-wings-and-taking-back-chickens’ trope,” wrote Assoc Prof Lim.
“Giving back to the people what they’ve paid in higher taxes as a result of inflation only restores them to where they would otherwise have been. That’s something to keep in mind as we listen to the goodies handed out today. They aren’t so much about generosity or prudent spending or even a desire to buy support. It’s simply a moral imperative.”
Earlier in his post, he acknowledged the wish lists for the Budget that had been circulating from different sectors before the roll-out. Many of these had to do with helping people and businesses cope with increased living costs.
Assoc Prof Lim acknowledged as well the current “fragile economic backdrop,” noting that “since peaking from the post-pandemic rebound, growth has dropped sharply, with the latest revision pegging the 2023 GDP expansion at 1.1 percent. Inflation has also remained higher than what the MAS would like.”
And just as DPM Wong pointed out early in his Budget speech, the WP MP underlined the uncertainty of global conditions.
Assoc Prof Lim specifically mentioned China’s “real estate implosion,” the likely recessions of the Euro Area and Japan, and wondered if the US economy will continue to be strong.
This is why it should not come as a surprise that several multiple cost-of-living packages have been announced since many Singaporeans are struggling, he pointed out. These packages include one for the Majulah generation, which was first announced last year but was explained at length by the Deputy Prime Minister in his Budget 2004 speech. /TISG
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