Workfare scheme, corporate tax cut and GST offset package praised

By Peh Shing Huei
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.

http://news.asiaone.com.sg/st/st_20070228_95347.html

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 !