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Tax the wealthy instead of burdening average Singaporeans with GST hike: Ex-NMP

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Former Nominated Member of Parliament (NMP) has challenged the hike that Finance Minister Heng Swee Keat announced earlier this week during .

Taking to Facebook, Cheng criticised the “mixed messages” the Government seems to be giving, what with the two per cent and the one-off cash SG bonus that will be disbursed to Singaporeans this year.

Cheng questioned what exactly will happen during 2021-2025 that will absolutely necessitate a GST increase, and also asked the Government to release proof that show that not raising the GST will result in a deficit:

“What exactly happens in 2021 to 2025 and after that causes a gap in financing that needs an increase in GST? Can we have some projections in spending that shows that from that point on our budgets will go into deficit if taxes don’t increase ?
“Because right now, with the exception of global recession years, our budgets are so healthy, they are in surplus every year. I have no doubt that as our population ages, expenditures will increase, but why would those years be a tipping point, and by how much?

These questions were not addressed by the Finance Minister during his budget speech. Instead, the Minister identified key areas of expenditure growth (such as healthcare and infrastructure) and explained that “even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap”.

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He had added: “…in the next decade, between 2021 to 2030, if we do not take measures early, we will not have enough revenues to meet our growing needs.”

The Minister also noted that the government has been tapping on the reserves over the last decade, but that we must dispense these resources “prudently” given the mature economy and aging population. He proclaimed that relying too much on the reserves will deplete Singapore’s nest egg and stressed, “this is not the Singapore way.”

Cheng compared the Minister’s cautionary remarks on managing the nation’s fiscal resources prudently, to the $700 million payout the Government will be giving out to all Singaporeans aged 21 and up this year, that comes from the exceptional budget surplus of $9.6 billion from FY 2017.

The Minister had declared that eligible Singaporeans will receive an “hongbao” of $300, $200, or $100 depending on their income and that this one-off bonus “reflects the Government’s longstanding commitment to share fruits of Singapore’s development with Singaporeans.”

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Cheng questioned, however, that if Singapore will be in a poorer fiscal position if we do not dispense resources “prudently,” wouldn’t it make more sense to save the $700 million too?

“In fact, the surplus this year is so wonderful that the Government is giving away 700m dollars to Singaporeans.
“On a separate note, if things are going to be so dire from 2021, perhaps we should save the 700m to be used then rather than giving it away now?
“Talk about mixed messages : “In a few years things will be bad enough that we need to increase taxes. But right now it’s amazing so here is a present for everyone !” Huh???”

The former NMP opined that the Government should tax the wealthy and put off taxing the average Singaporean for as long as possible. To this end, he welcomed the additional stamp duty on properties over $1 million which he called a “wealth tax”.

While Cheng admits that this “wealth tax” will affect him more than a GST increase, he added that he “fully supports” it instead of measures like a GST hike that could burden lower- and middle-income Singaporeans further:

“The additional stamp duty on properties above 1m dollars is to be welcomed. It’s essentially a wealth tax.
“Much has been said about income inequality in Singapore but in my opinion, after government transfers and housing subsides, our income inequality is still not dire.
“Less attention has been given to wealth inequality. Singapore is home to one of the most high net worth individuals per capita. Most wealthy people do not make money from salaries and employee remuneration but through investments. Yet, we don’t have a capital gains tax.
“We should explore more ways to tax the wealthy in Singapore (as opposed to just high income earners) who have chosen to make Singapore their home because of the stability, peace and living environment taxes pay for. This could supplement any increase in GST or other taxes on the average Singaporean, which should be put off as long as possible.
“The additional stamp buyers duty will affect me more than a GST increase, but I fully support it.”

What exactly happens in 2021 to 2025 and after that causes a gap in financing that needs an increase in GST? Can we have…

Posted by Calvin Cheng on Monday, 19 February 2018

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The additional stamp duty on properties above 1m dollars is to be welcomed. It’s essentially a wealth tax. Much has…

Posted by Calvin Cheng on Monday, 19 February 2018

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