Returning CPF monies in full, cutting ministers’ salaries and implementing minimum wage among SDP’s 10-point plan to reduce Singaporeans’ living costs

Returning CPF monies in full, cutting ministers’ salaries and implementing minimum wage among SDP’s 10-point plan to reduce Singaporeans’ living costs

Returning Central Provident Fund (CPF) sums in full, the sizing down of ministerial salaries, and the implementation of minimum wage for Singaporeans are among the reforms proposed in the Singapore Democratic Party (SDP)’s latest policy paper.

“A Better Life For All: Lowering the Cost of Living In Singapore”, launched on Sat (16 Mar), also proposed the reduction of healthcare costs via a single-payment system, lowering the prices of HDB flats, and removing the Goods and Services Tax (GST) for essential items while increasing the tax against luxury items.

Citing rankings by the Economist Intelligence Unit, SDP noted in its policy paper that Singapore has been ranked as the world’s number one most expensive city since 2014, in stark contrast to being only the 97th most expensive city in the world almost two decades ago in 2001.

The effects of the sharp rise in living costs in the Republic are reflected in statistics cited by SDP from the Singapore Business Review, which revealed that “85 percent of Singaporeans indicated that they don’t have enough savings for their retirement” in 2017, and that “6 in 10 Singaporeans don’t feel that they can have a comfortable retirement” in 2016.

“Those in between, the working middle-class also have it bad – half of our households live from paycheck to paycheck.

“They are one major bill away from financial ruin. This can come in any unforeseen, unpredictable circumstance like an accident, an illness,” warned SDP.

The Party, has thus, introduced, the following reforms, among several other reforms, which aim to alleviate the financial burden of low-income and middle-income Singaporeans accumulated throughout the past several years:

    • Returning CPF savings in full, which entails abolishing the Retirement Sum Scheme, through which retirees’ CPF monies are withheld, and putting in place a voluntary “opt-in” clause allowing CPF funds to be returned in instalments at the age of 55, instead of the current minimum payout age of 65 (automatic payouts begin at age 70);
    • Cutting ministerial pay to fund assistance schemes for the poor, based on Braddell Heights resident Abdul Aziz’s suggestion to reduce the “million-dollar” salaries of ministers “by 10 per cent” in order to make room for a retirement fund for the elderly.Under SDP’s plan, “the Prime Minister’s salary would be substantially reduced from the current $2.2 million a year to about $0.67 million a year”, while the salaries of other cabinet ministers “would be proportionally adjusted with the average annual salary for a full minister approximately $0.5 million (down from $1.2 million currently)”.

      “The total savings from the reduction is estimated to be about $10 million to $12 million a year,” said SDP.”

      The amount deducted from the ministers’ salaries” will then be channelled into “seed funding for the SDP-proposed Family Credit Fund”, which “will top up to $2,300 the income of all households of two or more persons that have at least one member of the household working full-time and whose monthly disposable income falls below $2,000”.

      “The initiative will replace all subsidies currently in place”, added SDP, “and will be phased out once a national minimum wage is legislated”, according to SDP;

    • Substantial public transport concessions for the elderly, whereby “senior citizens over 65 years of age will have free bus and MRT rides during off-peak periods and 50 percent concessions during peak periods” and free “special taxi services” for senior citizens above 80 years of age “for the purpose of travelling for essential medical consultation”;
    • A proper minimum wage law, which will protect low-wage earners from exploitation, and will “reduce income inequality” in addition to reducing “the demand for foreign workers”, as “a wage structure that does not strike an equitable balance between the lowest paid workers and the cost of living is detrimental to long-term economic growth”;

    • Reducing healthcare costs via a single-payer system, which will replace the current Medisave, MediShield, and Medifund schemes, in addition to “the removal of the GST for drugs and health services”, as taxes such as the GST, when paired with “cut-backs in government spending on healthcare” are placing immense burden on Singaporeans, particularly working adults, especially in the face of increased lifespans;
    • Lowering HDB prices, via the Non-Open Market (NOM) flats, which are flats “sold at cost (minus land cost) and will not be allowed to be sold on the open market”.The exclusion of the cost of land, SDP explained, will effectively halve flat prices, and will in turn allow home-owners to save their CPF for retirement in contrast to the current scheme”.

      Businesses will also benefit from the removal of land cost in the form of lower rental costs, and will also encourage employers to pay their workers higher salaries, or at least as stipulated under the proposed minimum wage legislation, added SDP.

      “This will have the further benefit of removing the incentive to keep wages down by hiring foreigners. Higher salaries mean better spending power which will in turn benefit the economy as a whole,” the Party suggested.”Presently”, added SDP, “high HDB prices caused by high land prices only benefit the government which continues to extract from Singaporeans a large proportion of our wages”; and

    • Scrapping GST for essential items, in which the tax will no longer be levied against “basic food items, as well as other basic necessities such as medical treatment and school supplies” in order to “protect poorer households from regressive taxation”.

      Conversely, said SDP, the GST rate for luxury items will be “increased to 10 percent or more”.”Presently, a poor family buying medicine or school textbooks is taxed at the same rate as a wealthy one buying a branded handbag worth thousands of dollars,” SDP stressed.

PAP’s promises to reduce Singaporeans’ cost of living were “promptly broken” after GE2015: SDP

In the same policy paper, SDP quoted Prime Minister Lee Hsien Loong promise during a General Election rally in 2015 regarding the PAP’s willingness to “work” with Singaporeans “to solve problems like the cost of living, how can we make life better, not quite burden (sic), lighter.”

However, said SDP, “the promise was promptly broken”, as price hikes in various utilities and public facilities such as gas, electricity, water, and public transport fees were observed after the PAP’s victory in the GE2015.

Even local public universities have taken the hit, said SDP, as tuition fees are increased “despite the NUS [National University of Singapore] and NTU [Nanyang Technological University] enjoying huge financial reserves of more than $3 billion each”.

“University fees have gone up every year since 2010 with the hikes ranging from 0.6 percent to 8 percent for undergraduate students,” SDP observed.

Polytechnics such as the Ngee Ann, Republic, Singapore, Temasek and Nanyang Polytechnics observed a “S$100-increase” starting AY2019, while Institute of Technical Education fees for full-time Nitec courses rose by a $20 difference to $426.

In addition to the various price hikes, a carbon tax was imposed by PAP this year “on businesses that emit 25,000 or more tonnes of greenhouse gases annually”.

“Experts say that while the tax does not apply directly to households, there will be a trickle-down effect on consumers power providers pass on the cost of the tax,” said SDP, adding that “the National Climate Change Secretariat estimates that the tax translates to an increase of $1.70 to $3.30 per month in electricity tariffs for the average household living in a four-room flat”.

The diesel tax, which was raised by 10 cents per litre to 20 cents per litre last month, “will affect taxi-drivers the most”, as “running costs” will potentially “take away earnings by $4 to $5 a day”.

SDP highlighted that “the rebate taxi firms will pass on to drivers will not be sufficient”.

According to SDP, the PAP is also seeking to “tax the digital economy”, which will signal the possibility of GST being levied on digital services such as “the streaming of entertainment content” starting Jan next year, as businesses running such content will most likely “pass on the tax to customers”.

“Not only is the PAP not helping to ease the financial burden of Singaporeans, it is adding to our woes by raising taxes and prices of all manner of goods and services,” charged SDP.

Quoting Deputy Prime Minister Tharman Shanmugaratnam, who said in 2015 that the “increased spending planned for the rest of this decade is sufficiently provided for by measures that the Government had already taken,” SDP argued: “If that is the case, then why did the government impose all the tax and fee increases mentioned above?

“This is against the backdrop of an already bloated reserves – some experts estimate that there could be as much as a trillion dollars in state coffers.

“Common sense asks: Is there a need to raise the GST and other fees when you already collect so much more than you need?” stressed SDP.

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