MPs laud Budget as ‘creative, generous’

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According to The Straits Times :

Workfare scheme, corporate tax cut and GST offset package praised

Feb 28, 2007
The Straits Times

IN HIS decade in Parliament, businessman MP Inderjit Singh has seen many Budgets, but this year’s blew him away.
‘This is one of the best, if not the best budgets, I have seen,’ declared the MP known for his strong, unvarnished views on government policies, as he launched the parliamentary debate on the Budget statement yesterday.

From then on, the praises flowed the entire day. MP after MP was not short on adjectives, describing the Budget variously as being creative, generous and bold, and having something for everyone.

This included the new Workfare Income Supplement for low-wage workers; the Central Provident Fund (CPF) restoration of 1.5 points; corporate tax cuts of 2 points to 18 per cent; and a generous offset package to cushion the impact of the hike in the Goods and Services Tax (GST).

Indeed, even as the 22 who spoke raised concerns with some gaps and problems, none challenged the fundamental strategy of making Singapore more competitive and helping the lower-income to help themselves.

Even opposition MP Low Thia Khiang (Hougang) praised Workfare’s permanent nature, saying that the Budget therefore ’serves to encourage social cohesion, strengthen safety nets in the society’.

But the Workers’ Party chief was the lone voice in the House arguing against the GST increase from 5 to 7 per cent.

He argued that with the economy doing well, revenue from corporate tax would go up, making a GST increase unnecessary.

The People’s Action Party (PAP) legislators returned his fire with ire.

Mr Hri Kumar (Bishan-Toa Payoh GRC) called his argument ‘completely illogical’.

He said: ‘In other words, let’s wait. When the Singapore economy is not doing so well, then increase taxes.

‘We should have a prudent fiscal policy. When times are good, let’s raise the funds we know we need to make sure Singapore takes the next step forward.’

Amid the praises, problems were also surfaced. An especially popular topic was the workings of the new Workfare.

Its new permanence as part of Singapore’s social safety net earned plaudits, with MPs happy that workers who earn $1,500 and below and are aged above 35 can get up to $1,200 a year.

But since contributions to CPF are necessary before the workers can qualify for Workfare, the MPs feared that workers in irregular jobs with no or dormant CPF accounts might miss out.

Labour MPs like Madam Halimah Yacob (Jurong GRC) and Nominated MP Cham Hui Fong told the House that the unions were working on the ground to get more employers, especially of contract workers, to put them on the CPF system.

There was also a worry that Workfare would breed a ‘crutch mentality’ among its recipients.

Said Dr Ahmad Magad (Pasir Ris-Punggol GRC): ‘We must tell workers that this scheme is to help them temporarily and the ultimate objective is not just to give handouts…but to assist them until they ‘graduate’ from this scheme.’

Mr Singh, an MP for Ang Mo Kio GRC, staying faithful to his pro-business credentials, said that even though the Budget was ‘far-sighted’, there were concerns over rising business costs.

There was a ‘triple whammy’ of increases in rentals, wages and GST, he said, urging a slowdown on other government cost increases.

He also suggested that essential items be exempted from GST, which he felt would be a more sustainable way to cushion future GST increases rather than ad-hoc offset measures.

Other MPs, like Mrs Josephine Teo (Bishan-Toa Payoh GRC) and Mr Yeo Guat Kwang (Aljunied GRC) said that there was feedback that the Budget, while comprehensive, was also complicated and confusing. Hence, more work was needed to explain it better.

Madam Halimah summed up her parliamentary colleagues’ views when she said: ‘I hope that all Singaporeans will support this Budget – not just the dollars and cents, but more importantly, the principles behind it that we need to work together to grow Singapore and to help each and every Singaporean find a place in Singapore.’

The debate continues today.

Jimmy: I THINK THE GOVERNEMNT SHOULD WORK OUT SOMETHING TO OFFSET GST FOR HDB FLATS. LETS WORK TOGETHER TO MAKE SINGAPORE A BETTER PLACE TO LIVE IT !

Simon : Well, the GST increases definitely will help beef up the government revenue no doubt…but with 2% increase in every single goods and services purchased in Singapore might cost low income earner much more heart pain…then expected.

Let me show you my analysis…in the sales career market, there are bound to be variable components in the salary that can only be earned through performance or reaching a certain target. This kind of jobs usually have lower basic ($800 to $1500) and due to whatever situation that the sales person cannot achieve his/her target and becomes low income earner for that month…DOES HE/SHE get MORE CPF incentive just for that month?

The question is HOW HE/SHE SURVIVE in the country that have higher cost of living if he/she cannot even afford anything after paying the bills and etc.

The question is HOW MUCH INCREASE in the cost of food and beverages? 2%?? How are you going to charge a 2% hike on soft drinks fairly? Retailers or companies will inflate their charges more then 2% for any small charges (less then $2)  in any industry!!

You will find food court usually charge additional 10 cents (more then 2% right?) on drinks with unfair reasons such as higher overheads (Rental and Utilities also got GST right?) and many more if you want to seek out real life examples.

So, with consumer end up paying for much more then 2% for everything they purchase and much higher bills to fork out ….how will they survive in the end?

People of middle age, uneducated, inexperienced, certified by unrecognized institution, and those born in a poor family might not have the funding to further upgrade themselves…what will become of them when they are BROKE and get low income with high cost of living…???

Results in more MRT suicides maybe?, more taxi drivers to drive you in circles, wait for booking or mid-night charge and choose passengers, more scams, more mlm, more beggars, more flea markets that sell stolen goods, more crimes, more struggles, more anger and heartache.

The solution is simple, that is to create a more simplified process of starting a businesses as stall holders in the streets, road sides, hdb, mrt side walk, car parks, roof tops, parks and more!

The landlord computerised station (AXS or SAM) to book designated area for operating stalls should be as simple as topping up Ezlink card…or redemption of MacDonald Member points…either first come first serve basis or long term booking with monthly upfront payment basis. If the stall owners booked the area and fail to set up the stalls on time (grace period 2 hours maybe), half of his booking fee will be forfeited and let others book the remainder half of the day in place of your reserved area at cheaper rate.

If anyone can set up an ebay account or Yahoo Auction Account with an debit card and pay pal…it MUST also be as easy to set up your own stalls ANYWHERE in Singapore according to a MUCH RELAXED Rules and controlled land lord station (computer at location or via online booking). Of course only registered companies can set up stalls however the process of setting up the company for such business must be As CHEAP as online auction Account for these business!

The question of tax break for these entreprenues must be very attractive to lure people into such business and SURVIVE! The best should be NO TAX AT ALL!

If this suggestion is good, please email me at simontay78@gmail.com and hopefully I can submit my proposal to our minister!

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  • Jimmy

    Opposition MPs, NMP query need for GST hike

    They say land sales, with other income, are enough to fund more social spending

    By Goh Chin Lian
    Mar 01, 2007
    The Straits Times

    TWO opposition MPs and one Nominated MP yesterday questioned the need for an increase in the goods and services tax (GST).
    The Government had not put forward a convincing case for it, they said.

    Workers’ Party chairman and Non-Constituency MP Sylvia Lim and Singapore Democratic Alliance leader Chiam See Tong (Potong Pasir) said the Government had enough money to pay for increased social spending without having to raise the GST from 5 per cent to 7 per cent from July 1.

    This is especially so if revenue from the sale of state land and Net Investment Income (NNI) were included.

    And the cut in corporate tax from 20 per cent to 18 per cent could well pay for itself without having to raise GST, added Ms Lim.

    Mr Chiam noted that land sales raised about $4 billion a year – more than enough to cover any loss of revenue from the lowering of the corporate tax rate and with enough to finance Workfare.

    ‘If the Government is not obsessed with having a Budget surplus on every Budget day, but aims only for a balanced Budget, there is no need for a GST hike,” said Mr Chiam.

    ‘It only has to use cash generated by land sales to balance the Budget.’

    The current practice of excluding revenue from land leases from the Budget is seen as overly conservative and not in line with international accounting standards, noted Ms Lim, citing the International Monetary Fund and the Organisation for Economic Cooperation and Development.

    If there was any fear on the Government’s part of banking on such volatile revenue, Ms Lim suggested counting, say, just half of it for the Budget.

    The MPs also wanted more information on the proposal to include capital gains as part of the NNI from reserves which may be used by a current term of government.

    Some economists have said that profits from selling assets or realised capital gains may be included, and estimated that this may boost NNI by some $2 billion to $3 billion.

    Nominated MP Eunice Olsen said: ‘How do we know the income is not enough to preclude the need for a 7 per cent GST or even a 6 per cent GST?’

    Also challenged: The argument that GST has to increase to make up for the cut in corporate tax rate.

    Ms Lim said analysts have noted that if firms do well, tax collections need not suffer because of a cut in corporate tax.

    And in countries like Ireland, a corporate tax cut stimulated growth and attracted foreign capital and talent, she added. If growth is boosted and companies made more, corporate tax revenue may even go up. ‘The data suggest that the Government may end up better off,’ she said, a point that her party’s secretary-general, opposition MP Low Thia Khiang (Hougang), also raised on Tuesday.

    Questioning the need for the GST to go up to raise revenue, she said revenue from personal income tax and statutory board contributions are expected to increase by close to $1 billion in the coming financial year.

    And come 2010, the integrated resorts could add more revenue to the taxman’s coffers – US$1 billion (S$1.5 billion) to US$2.5 billion a year, according to some estimates.

    With these other sources of revenue, there is no need for a GST increase now, she said.

    http://news.asiaone.com.sg/st/st_20070301_95783.html

    SEEMS LIKE A LOT OF PEOPLE ARE NOT CONVINCE ABOUT THE INCREASE IN GST. I AGREE ON THE OPPOSITION SIDE REGARDING THE LAND SALES. I WOULD LIKE TO ADD A POINT WHICH IS THE SALE OF HDB FLAT, WHY IS THE PRICE KEEP GOING UP ? HOW MUCH IS THE ACTUAL COST TO BUILD A HDB FLAT COMPARE TO THE SELLING COST. I THINK QUITE A BIT OF REVENUE ARE COMING FROM SALES OF HDB FLATS AS WELL SO WHY INCREASE THE GST ? AND ALSO THE INTEGRATED RESORT THAT IS COMING UP, IS SURE TO ADD MORE REVUENE TO THE ECOMOMY.

    IS NOT A MATTER OF SURVIVAL (LIKE WHAT SIMON COMMENT)WE ARE TALKING ABOUT HERE, I AM SURE THE MIDDLE CLASS LIKE OURSELVES CAN SURVIVE IN PAYING 10CENTS MORE FOR KOPI, 50 CENTS MORE FOR A PLATE OF CHICKEN RICE, 10 CENTS MORE FOR TRANSPORT , $1 MORE FOR A MOVIE ETC.. BUT THE CONCERN IS WE ARE ALSO SPENDING OUR MONEY TO BUILD UP THE ECOMOMY, IF GST IS LOW, PEOPLE WILL SPEND MORE, GST HIGH, PEOPLE WILL SPEND LESS. THERE WILL BE NOT MUCH USE IF YOU CAN AN ANNUAL INCREMENT OF 6-8% BUT YOU PAY MORE FOR YOUR DAILY NECESSITY.