By focusing on introducing “little tweaks and complex schemes” in Budget 2020, the Government “is missing a crucial window of opportunity” to instil “much-needed reforms” to lift the financial burdens of working-class and middle-class Singaporeans, said the Singapore Democratic Party (SDP) in its Budget 2020 Forum on Wed (4 Mar).
Highlighting that the working and middle classes in Singapore are increasingly struggling with the high cost of living — which greatly affects how they deal with financial management, their retirement prospects and maintaining productivity at work — SDP treasurer Bryan Lim thus said that the Government should cancel instead of postponing its plans to increase the Goods and Service Tax (GST) after 2021.
Noting that Singapore already has “bloated” reserves, he questioned the need for a GST hike.
“We have accumulated a total of $19.1 billion in budget surplus from 2016-2018. Even after we account for the $10.9 billion deficit expected for this financial year, a balance of $8.2 billion still remains,” said Mr Lim.
Mr Lim also referred to Deputy Prime Minister Tharman Shanmugaratnam’s statement before the 2015 General Election, in which he said that “increased spending planned for the rest of this decade is sufficiently provided for by measures that the Government had already taken”.
Consequently, he mooted the idea that the GST should be removed for basic necessities such as healthcare and should instead be increased to 10 per cent for luxury items.
“Under the current regressive system, a poor old man buying medicine is taxed at the same rate as a wealthy woman buying a Louis Vuitton bag,” he said.
Mr Lim also advocated the reinstatement of the estate duty for the super-rich abolished by the Government in 2008.
In addition, a 30 per cent tax rate with the exemption threshold of $20 million should be upheld for citizens and non-citizens, he said.
“In other words, only properties worth $20 million and more which are passed down as inheritances will be taxed,” said Mr Lim.
The SDP also proposed raising the cap for personal income tax for the top 1 per cent earners in Singapore to 28 per cent.
“This figure is still well below the level of advanced economies which are typically in the 30-40 per cent range,” said Mr Lim.
WATCH: SDP proposes alternatives to measures in its Forum on Budget 2020
Only foreigners “with the right skillsets”, “in short supply” should be hired: SDP CEC member Khung Wai Yeen, on reducing S’pore’s dependency on foreign manpower, curbing discriminatory hiring practices against S’poreans
While the Fair Consideration Framework (FCF) is a step “in the right direction”, Khung Wai Yeen, a member of the party’s Central Executive Committee (CEC), spoke about the need to reduce Singapore’s dependency on foreign PMETs in the long run.
Citing mainstream media reports such as “About 1,000 firms suspected of discriminatory hiring practices, placed on Government watchlist” and “MOM further tightens foreign worker regime to develop ‘strong local core of skilled workers“, Mr Khung said that such articles “affirm what we know about the unfair hiring practices” being upheld by certain companies in Singapore at the expense of its citizens.
Such practices, he said, has led to “a congregation of foreigners in certain industries”, and consequently raise questions on whether Singaporeans lack the necessary skillsets to land the same positions.
While Mr Khung agrees that Singapore, “as a globalised city-state”, would place itself at a disadvantage if it closes its doors to foreign talents, he stressed that the key to managing the problem of discriminatory hiring practices against Singaporeans is to hire “only foreigners with the right skillsets” and whose skills are “in short supply” in the Republic.
“This will ensure that those who are allowed [to work] in the country are helping to elevate our economy by complementing our local workforce rather than just being low-cost workers,” he said.
Singaporeans should also not be pressured into accepting lower wages solely on the basis of competing with foreign labour with similar qualifications who are willing to accept such wages, stressed Mr Khung.
Mr Khung also reiterated SDP’s call for a minimum wage in Singapore as a means to bridge the widening socioeconomic gap in the country.
Citing how blue-collar workers in Australia are happy to take up waitstaff and cleaner positions due to being paid a living wage, he said that workers in certain positions such as traffic controllers — where they are tasked to redirect traffic in construction areas — are paid AUD$5,000 per month.
Such workers, said Mr Khung, are able to lead a “dignified” life “comparable to some white-collar workers”.
CPF should return to its true purpose of being a savings fund for S’poreans’ retirement, non-open market flats policy a better alternative: SDP member Alfred Tan
Entrepreneur and party member Alfred Tan said that the Central Provident Fund (CPF) at present has “lost credibility” in ensuring that it meets its true purpose, which is to act as a savings plan to secure Singaporeans’ financial adequacy in their later years.
He cited findings from recent research in which it was found that Singaporeans may require a monthly “minimum of $1,379” in their golden years.
Findings from a recent household expenditure survey stating that retiree households living in public housing receive an average of $1,522 per month — only $280 from which is attributed to CPF payouts, he said.
A “significant portion” of their monthly income, noted Mr Tan, comes from their children and relatives.
“This dependence [of the elderly] on their working children to support their retirement years places a burden on workers who already have children of their own to support,” he said.
The CPF at present, said Mr Tan, is “a constant reminder to all Singaporeans” that the Government has not fulfilled its “promise to fully return the savings of Singaporeans when they reach 55 years old”.
Mr Tan quoted a statement made by Toh Chin Chye, the ruling People’s Action Party (PAP) chairman and Singapore’s Deputy Prime Minister at the time, in which he spoke out against the government’s attempt to raise the CPF withdrawal age in Jun 1984:
“I think fundamental principles are being breached … The CPF is really a fixed deposit or a loan to the government, which can be redeemed at a fixed date when the contributor is 55 years old. If I were to put this sum of money in a commercial bank, and on the due date, I go to the bank to withdraw the money and the manager said, ‘I’m sorry, Dr Toh, you will have to come next year’, there will be a run on the bank.”
Dr Toh’s concern, said Mr Tan, was “ignored” by the government at the time.
The government, he added, changed the nature of the provident fund and allowed it to be used for other purposes.
“When one has been enjoying a good thing, it becomes hard to let go — be it food, play, power, or your CPF savings … The government starts to dream up new programmes and reasons why Singaporeans must continue to leave their savings in the CPF,” Mr Tan said.
“Who gave the idea that Singaporeans do not know how to manage themselves? Who gave the idea that Singaporeans do not know how to manage funds in their bank savings and fixed deposit accounts?”
Mr Tan called upon the CPF Board to “work hard to prove their performance” to its contributors.
“You want our savings? You work for it. You don’t compulsorily force it … Singaporeans can think. They can manage their monies. They have been doing this all their lives.”
A responsible government, he said, can provide financial counselling and education to contributors prior to them withdrawing their CPF savings at 55.
“If you allow the CPF to be used to pay for highly-priced HDB flats, how then are you going to have sufficient cash left to fund your retirement? Sell the roof over your family’s heads just when you are supposed to sit back, smell the roses and enjoy the fruits of your labour?” Mr Tan questioned, adding that given the “wild swings in property prices”, it is uncertain if the acquired property will not drop in value.
Mr Tan advocated SDP’s non-open market flats policy as an alternative to using one’s CPF’s funds to purchase an HDB flat.
Budget 2020 measures don’t “go far enough” to solve Singapore’s core socioeconomic issues; public healthcare payment system too complicated despite world-class infrastructure: SDP
Responding to TOC‘s query regarding whether the SDP think the Ministry of Manpower’s move to increase the wage cap for foreign PMETs to level the playground for their local counterparts will work, party chairman Paul Tambyah said that while it is a good move overall, it “doesn’t go far enough”.
“With inflation, wages are going up across the board … Companies have found all kinds of ways to go around the wage cap in terms of reducing bonuses and not having to deal with Singaporean men going on reservist training,” said Dr Tambyah, adding that the move is one of “these piecemeal measures” which do not deal with “fundamental issues”.
When asked on whether the Budget 2020 is generous enough to encourage Singaporeans to vote for the incumbent, Mr Lim replied: “On the surface, it looks really attractive … But if you actually take a closer look and compare against the previous Budgets, the goodies and handouts — it’s just a matter of renaming them.”
Mr Lim said that the Budget has not addressed root issues in Singapore’s socioeconomic landscape such as the high cost of living.
Responding to concerns raised by a member of the public regarding high medical costs in Singapore, Dr Tambyah said that while Singapore has some of the world’s best healthcare professionals and infrastructure, the current healthcare financing system is convoluted and possibly inadequate to support patients bearing the brunt of such high medical costs.
“We have Medisave, Medishield Life, Medifund … Those plans only account for less than 15 per cent of total healthcare expenditure. Where does the rest of the healthcare expenditure come from? It comes from government subsidies, employer-funded healthcare, and out-of-pocket payment,” he said, highlighting that “the last two are escalating at an extremely high rate”.
What Singapore needs, said Dr Tambyah, is a “single, simplified” universal payment system in line with SDP’s policy recommendations, which he said will save money in the long run.
“Countries such as the United States, which has an even more complicated system — they spend millions of dollars more on healthcare,” he said, in contrast with Scandinavian countries “which have lower administrative costs” and produce better results.
Touching on the issue of Singapore’s reserves, Dr Tambyah stressed that the SDP is not asking to tap on the reserves, but the ability to examine the returns on investments made by sovereign wealth funds Temasek and GIC more closely.
“What we are asking for is more transparency, where the money comes from, where the money is going to, what returns Singaporeans are getting from our hard-earned money,” he said.
“We’re not even saying, ‘Touch the reserves’. We’re saying, ‘Touch the returns on the reserves’ … And not even all of it. Touch three-quarters of the returns on the reserves,” said Dr Tambyah.