A Government needs to collect sufficient tax to pay the expenses of running the country and to provide the social benefits to its citizens.
The tax should be collected fairly from the citizens. Those with higher incomes should pay more tax. A high income earner should pay more tax willingly. It is better to earn more and pay more tax, rather than be in the opposite situation.
After paying a higher amount of tax, the high income earner should be entitled to the same social benefits as other citizens. They do not expect to receive more social benefits, but they should not be given less.
Subsidised Healthcare
I am against means testing for subsidized health care. I believe that all citizens should be entitled to education, safety, security and the other benefits of living in Singapore, including access to subsidized health care.
We should avoid the requirement for people to provide proof and be labeled as “poor” in order to receive subsidized health care. It is best that this type of classification be avoided.
Type of Housing
The Government now distributes budget surpluses to the citizens in some years, based on income tax level or type of housing.
I prefer the distribution to be made equally to all citizens or be based on objective criteria such as age or number of members in the family.
There is some inequity in distributing the benefits based on type of housing. Some retirees have little or no income, but live in private properties bought at a low price many years ago. Some live in the private property as tenants, not owners. These people are not as well-off as the owners.
We also have the cases where the residents of HDB flats own expensive cars and are quite wealthy. They enjoy the higher payouts based on their type of housing.
It may be argued by the proponents of the current method of distribution that the percentage of odd cases (i.e. those who receive more or less than they should be entitled to) is small. Nonetheless, it is better to avoid this anomaly entirely.
Types of taxes
I prefer a system of taxation where more revenue is collected from income tax. Those who earn more, pay more tax.
In recent years, there has been a move to shift taxation from income tax to consumption tax, which is known as goods and services tax (GST) in Singapore. GST has increased the cost of living for everyone and has hit the lower income people hardest.
I hope that the GST will not be increased further from the current level. If possible, it should be reduced to 5 percent or lower. If more tax revenue is required, it can be collected from income tax, property tax and other sources.
Minimum Wage
I recent years, the low wage earners in Singapore are hit hard from two sources – lower wages due to competition from the influx of foreign workers and a higher cost of living.
It is time for us to consider the need for all workers to be given a minimum wage that will allow them to earn enough for a hard day’s work to maintain a basic standard of living for the family. The same minimum wage can apply for foreign workers, but as the foreign worker’s levy is deducted, their net wage will be lower.
A minimum wage will raise the operating cost for some businesses. The business can still be made competitive through lower rents, levies and a lower profit margin (but still attractive to the investor). If wages are raised to the minimum, it is likely that there is less demand for business premises. This will lead to lower rentals that will offset the higher wages.
Foreign Investments
The low corporate tax strategy is aimed at attracting foreign investments into Singapore. We should examine some of its negative impact.
I observe that some foreign investors set up businesses in Singapore but depend heavily on low cost foreign workers. These businesses create few jobs for Singaporeans. They create a high social cost – depressed wages of local workers, congestion in housing and public transport and changes to the social fabric.
We have also attracted many wealthy foreigners to bring large sums of money into Singapore. They increase the prices of private property to levels that are not affordable to most citizens.
Low interest rate
Even the money brought into Singapore by foreign investors has a negative impact on Singaporeans. They cause interest rate to be at a low level, among the lowest in the world. The low interest rate means less interest income on the savings of Singaporeans, especially the retired persons. The low interest rate makes it difficult for them to have a sufficient income to meet the cost of living.
Conclusion
Our past economic strategy has contributed to the economic success of Singapore. They have also contributed to social problems. Some of these problems have not been understood or analysed.
I believe that a system of higher corporate and income taxes, and lower consumption tax (i.e. GST) may be more beneficial to citizens and permanent residents living in Singapore.
We also need to review the current policy on “means testing” and also the manner of distributing budget surpluses based on type of housing. I prefer a system of equal access to the social benefits. I hope that these issues can now be considered.
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