This speech was given with regards to the proposed GST hike in Budget 2022, and delivered on 28 February 2022.
Mr Speaker, the Progress Singapore Party (PSP) will not support this Budget because of the GST hike. Middle class Singaporeans will have to bear an additional GST burden of $1.2 billion per year. On top of that, many Singaporeans living in private properties who are asset rich but cash strapped, will bear a significant part of the $380 million property tax increase per year.
This Budget is a feeble attempt to increase the taxes on the rich after three decades of favourable tax policy towards them. The additional personal income tax raised is only $170 million per year, which many Singaporeans cynically pointed out, was not enough to pay for the $180 million per year funding for SPH Media Trust. The Additional Registration Fee increases for luxury cars is not really a burden to the rich, because the fee is transferable to future owners.
Not enough has been done on foreign manpower policy too. The increase in the minimum qualifying salary for Employment Pass (EP) holders is too little to be effective. I am also surprised that S Pass holders are needed in the finance industry where many Singaporeans are hoping to work. The more effective way to manage the quality of our EP holders is to ensure fair competition between the EPs and Singaporeans through imposing a standard wage levy on all EPs who do not make CPF contributions. If we impose a monthly $1,200 EP levy, as I had recommended in the Budget debate last year, and then again in the Foreign Talent and Comprehensive Economic Cooperation Agreement (CECA) debate, the levy will raise almost $3 billion and make the GST hike unnecessary.
As global inflation is on an upcycle, we will have to do more to help Singaporeans to cope with the rising cost of living and asset inflation. This is the best timing to share with Singaporeans a small part of the huge windfall profits chalked up by GIC, MAS and Temasek last year. However, not only did the Government not do that, it also increased the tax burden on Singaporeans. This is incomprehensible to me.
The Government used healthcare costs as the main rationale for raising taxes. However, Singaporeans have paid and are still paying dearly for healthcare. Is it fair to ask them to pay more taxes for healthcare again, especially in these challenging times?
Look at the facts: $100 billion of the Singaporeans’ CPF funds are locked up in MediSave accounts, and Singaporeans contribute $10 billion to MediSave every year; $10 billion of reserves have been accumulated in MediShield and CareShield, while Singaporeans continue to pay $3 billion of CareShield premiums every year and the premiums are likely to rise every five years. Singaporeans also pay billions of dollars in private healthcare insurance.
Singapore is actually in a very strong financial position. We have the resources to pay for even the large healthcare cost increases forecasted by the Government. Look at the facts again. The Government reported $1.4 trillion of financial assets as of 31 March 2021. This is an indication of the size of our national reserves. Our nation’s financial assets are currently closer to $1.6 trillion, due to an increase of $200 billion of reserves over the last two years, despite and after the COVID-19 drawdowns.
Net investment income from these assets is now more than $40 billion a year. Half of the net investment return, or $20 billion, is recycled back into the reserves. Another $10 billion of annual land sales proceeds is put into the reserves directly and not used for the current year spending. Thus, even without touching the growing reserves, we have a total of $30 billion of unutilised revenue annually, which can be deployed for the current year spending in the future. We can actually provide for our current generation while continuing to save for future generations at the same time.
Hence, the Government’s argument for the future generation does not hold water. The virtue of frugality preached by the Finance Minister is telling cash strapped Singaporeans to tighten their belts again while the Government is sitting on massive reserves and unutilitsed revenues.
Of course, we cannot rest on our laurels and rely on our reserves and unused revenues all the time. I only want to stress that we have the buffer and time to make better long-term plans. Those plans should include the Government focusing on fiscal efficiency and discipline.
While the Government has been running Budget surpluses these years, public spending cuts have not been discussed openly. Our Budget has increased by about 7% per year over the last two decades to about $100 billion for FY2022. There is, thus, ample room for us to cut down on existing spending.
The Finance Minister has disclosed he is imposing a 3% cut on existing expenditure from next year. If he can achieve that every year, we will have a saving of $3 billion per year. Again, there is no need for the GST hike. We can probably do more cuts than 3%.
We advocate setting clear socio-economic targets for each expenditure. That is the reason we supported the SINGA scheme, which will bring big infrastructural projects under stricter financial discipline. For example, many Singaporeans are asking, what are the socio-economic targets for SPH Media Trust, to which the Government is committing $900 million over the next five years? How about the billions of dollars of taxpayer money spent on local Universities that have relied heavily on foreign talent, but do not seem to be producing sufficient local skills and talent needed for our economy? When public funds are used to support or rescue a commercial organisation, are there plans to claw back the funds when the commercial organisation starts to make money?
For the COVID-19 spending, many Singaporeans have questioned why the $30 billion Jobs Support Scheme (JSS) is used to support profitable companies without a claw back feature. The clawed back funds could have been used to help many more Singaporeans who needed help. So, as the amount of resources at the disposal of the Government grow larger, we need to check on the expenditures more closely.
We are also against the goody bag approach that is adopted by the Government to convince Singaporeans to accept the GST hike. Handing out short-term ad hoc goodies to Singaporeans instead of using permanent schemes, will not produce resilient Singaporeans but dependent Singaporeans. Let me give you a specific example. I have been recommending a minimum living wage of $1,800 per month in take-home pay for all Singaporean workers. This works out to about $2,250 in gross wage per month. This may appear high, but if you add Workfare Supplement, GST Voucher (GSTV), U-Save rebate, CDC Voucher, and now, Progressive Wage Credit Scheme (PWCS), you could easily reach the $2,250 gross wage per month.
Hence, instead of handing out drips and drabs to Singaporeans, the Government could have provided a lump sum to top up the average worker’s gross wage to $2,250 per month. A permanent monthly wage of $2,250 will give workers more clarity in making personal financial plans for himself and for his family. That is how we make Singaporeans more resilient.
Mr Speaker, in conclusion: one, the PSP does not support this Budget because there is no need for the GST hike; two, our country is in a very strong financial position, but Singaporeans need all the help they can get to overcome their current financial challenges; three, with this Budget, the Government is asking Singaporean to tighten their belts again while it sits on massive reserve and unutilised revenues; four, as Singaporeans are already burdened with high healthcare cost, the Government should first control the escalating cost of healthcare by changing the way our healthcare system works; and finally, PSP thinks that Singapore can have a new financial compact which is better than this Budget. Speaker, Chinese, please.
(In Mandarin): [Please refer to Vernacular Speech.] The PSP is against the GST hike and therefore does not support this Budget. By increasing the GST, the Government will add $1.2 billion tax burden onto middle-class Singaporeans a year. At the same time, income tax and wealth tax increases for the rich are expected to increase by less than $600 million a year.
Singapore’s fiscal position is good. At a time when Singaporeans are still facing various difficulties, we should try to come up with better fiscal solutions to help them. At the moment, we have at least $1.6 trillion reserves and $30 billion unutilised annual revenues. Why does the Government want Singaporeans to tighten their belt at this juncture when it is sitting on this gold mountain?
Singaporeans have already spent a lot on their current and future medical needs. Hence, our focus should first be on reducing rising healthcare costs, rather than adding to the burden of Singaporeans.
Government expenditure has grown rapidly by 7% per annum over the past 20 years. It is time to see how we can reduce non-social and non-medical expenditures. Of these, the Government’s $100 billion Covid-19 relief package needs to be properly accounted for.
We are looking for a new financial compact that distributes national resources more equitably and benefits all segments of society.
(In English): Singaporeans deserve better.
