Reflections on Budget 2008

By Eric Tan Heng Chong

My parents taught me to be gracious when you receive a gift, and not to scrutinise it. This year Singaporeans received a ‘gift’ in the form of the Budget. There are many good things about the Budget for both individuals and corporations.

But despite what my parents taught me, I cannot help feeling that perhaps I must re-examine these gifts. My instincts tell me that the giver once took a lot from me and is now only returning some to me. I remember the increases in taxes and charges; these were permanent. The gifts to me now are one-off goodies.

I recognise that sometimes, for the greater good, I must suffer some loss. The taking, however, is becoming too much to bear, and the reasons given for it not good enough. It is time the government takes less and gives some back. I would suggest the following ways to do it:

Remove GST for essential goods like food, utilities and clothing. This a 7 per cent reduction in the price of these goods and will certainly be a significant off set against inflation. Furthermore this reduction will benefit all segments of society.

Reduce the tax on petroleum and diesel. This will reduce transportation costs for all. In 2007, the government collected S$373.1 million in petroleum excise duties. In the 2008 Budget they plan to collect S$381.6 million. I believe that there is flexibility for them to tax less in this category.

Reduce the cost of public housing by not benchmarking the price to private housing. Currently, the government decides the cost of HDB flats based on how much private housing costs, and forgets that it is providing subsided government housing. This is only a market price subsidy. The government should instead base the price of HDB flats as a discount on the cost price (including land cost), making it a real cash subsidy. There is no point in pricing the flat high and then giving discounts or grants to selected groups.

Freeze price increases wherever possible. I am not convinced that some of the increased charges are justified. While the government tells us that it is very concerned about inflation, it proposes raising university fees, Medishield premiums, ERP charges etc. These increased fees are a double whammy for the average man in the street. The government tells us that it has no control on inflation for many goods, but it certainly has control over these charges—it is the government’s duty to bear the higher costs in these cases, for they are in essential areas of education, healthcare and transport.

We, the common people, are not asking for handouts, one-off or otherwise. We are only asking the government to take less money away from us. The next question that comes to mind, then, is how to make up for the reduction in government revenues, should these measures be taken.

Perhaps a major cost-saving initiative in the budget can do this.

Since the government told the people not to expect such goodies next year as there is no certainty that the economy will continue to do well, it is prudent for the government to maintain a lean cost structure and plan for some cost savings. This year’s Budget did not have any visible major cost-saving initiative—in fact, there was a plan to increase operating expenditure by 10.6% in 2008 as compared to 2007. This increase amounts to S$2.78 billion, and perhaps a re-examination of it is necessary.

A reduction in operating expenditure would free up some funds for the government to help the people. The former Speaker of Parliament in 2002 spoke up against excessive government expenditure, calling some government buildings "The Seven Wonders of Singapore". This is one such accolade that we can do without.

Perhaps I am not living up to my parents’ expectations in being gracious in accepting gifts. But true givers give from their own bounty without expecting anything in return. The money that we are being given now is not even their money; it is the people’s money, our money.

I recently met a businessman and asked him what he thought of the budget. He replied that he was just waiting for when they will collect it (the money) back. I hope he is wrong, and that the next Budget will take less and give some.

About the author: Eric is a member of The Workers’ Party. The above article is written in his personal capacity and as a brief commentary on the Budget.