SINGAPORE — In his parliamentary speech on Wednesday (22 Feb), Mr Louis Chua, Workers’ Party Member of Parliament for Seng Kang GRC, highlighted his concern over the mounting cost of living pressure faced by Singaporeans due to inflation.
“The one thing that is top of mind for many of my residents during our house visits is the mounting cost of living pressure they face. Inflation, unfortunately, is not a phenomenon that Singaporeans can wave goodbye to in 2023,” he said.
He added that the Monetary Authority of Singapore expects inflation to stay high in 2023, with Consumer Price Index (CPI)-All Items inflation projected to come in at 5.5% to 6.5% and core inflation expected to average 3.5% to 4.5%, including the impact of the 1% increase in Goods and Services Tax (GST) rates this year and likely next year as well.
Mr Chua also expressed concern about the risks to the economic outlook in Singapore, despite the government’s expectation of economic growth in 2023. He cited a recent uptick in retrenchments observed by the Ministry of Manpower in Singapore, and the possibility of higher unemployment rates. He also mentioned the retrenchment of 6% of Google’s Singapore workforce over the past weekend.
However, Mr Chua acknowledged that the government’s fiscal outturns have been better than expected in the last two years. In FY2021, the actual operating revenues were about S$5.9 billion higher, while the primary deficit was S$13.4 billion smaller than initially estimated in Budget 2021, resulting in a surplus of S$1.9 billion. Similarly, in FY2022, operating revenues are now expected to be S$8.5 billion higher than what was initially estimated in Budget 2022.
Mr Chua hoped that the government would support Singaporeans should inflation pressures persist and labour market conditions continue to deteriorate, adding that the need to maintain a balanced budget should not constrain the government’s ability to activate its “drawer plans” should the need arise.
He also proposed suggestions on how to grow recurrent revenue sources and raise contributions from those segments that are better able to contribute. He spoke extensively about Base Erosion and Profit Shifting (BEPS) 2.0, a significant reform to international tax rules to ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate.
Mr Chua said, “I hope that the Government will view the global minimum tax reforms as an opportunity rather than a threat, given Singapore’s strong non-tax advantages and attractiveness to MNEs.”
He also suggested that the government could re-introduce the tax on Net Annual Value for high-value homes or secondary residences to target the wealthy who can afford properties like Good Class Bungalows.
Mr Chua welcomed the government’s move to make vehicle taxes more progressive and praised the government’s decision to further adjust the Additional Registration Fee (ARF) and cap the Preferential ARF rebates at $60,000.
Mr Chua stated, “With the move, not only would a Ferrari Roma cost about 23% more as a result of the higher ARF, the capped PARF rebates would mean about 22% of the selling price would be lost as well, resulting in a more meaningful contribution of high-end vehicle related taxes to Government revenues.”
In this connection, he expressed his hope that the government will continue to consider various options to tax wealth effectively and implement other forms of progressive taxes to raise revenues more equitably rather than relying on regressive taxes such as the GST.
In his speech, Mr Chua also highlighted the need to make it easier for Singaporeans to start a family. He spoke about the struggles of parenting and the need to make sacrifices and trade-offs, and emphasized that as leaders of the country, Parliamentarians need to continuously strive to make it easier for Singaporeans to balance family, work, and life.
In particular, Mr Chua discussed the need to protect and enhance Flexible Work Arrangements (FWAs) and parental leave, especially as the gains made during the COVID-19 pandemic are being eroded. He expressed concern that the hard-earned gains from FWAs in the last few years will soon be permanently lost if legislation is not put in place soon.
He also noted that while the move to raise Government-Paid Paternity Leave from two weeks to four weeks is welcome, he wonders if would-be fathers will be in a position to take their full entitlement of the expanded paternity leave, and feel comfortable doing so.
Mr Chua also expressed concerns about the changes to the Working Mother’s Child Relief (WMCR), which he described as a puzzling move that could have the unintended opposite effect of discouraging married women to remain in the workforce after having children.
“Based on my estimates of working mothers’ income within married couples in resident households, roughly 20% of mothers will benefit from the WMCR change to the tune of up to $40 while the remaining 80% of mothers will either be unaffected or worse off. I wonder if the WMCR truly seeks to reward families with children and encourage married women to remain in the workforce after having children, or does it have the unintended opposite effect?” said Mr Chua.
He suggested that a motherhood tax rebate for working mothers earning below a certain income could be a better way to support lower to middle income working mothers and strongly urges the Government to reconsider the changes to the WMCR.
Finally, Mr Chua welcomed the move to raise the CPF salary ceiling from S$6,000 a month to S$8,000 a month, but suggested that the Government should also raise the annual salary ceiling in tandem with the monthly salary ceiling move to benefit this expanded group of workers.
Expressing concern that the expectations and aspirations of everyday Singaporeans are not being met with each passing generation, Mr Chua cited a statement from the Ministry of Finance (MOF) in response to a report on minimum income standards for households in Singapore, cautioning that the report’s standards may not be an accurate reflection of basic needs due to assumptions used, such as including private enrichment classes and overseas holidays.
Mr Chua questioned whether a similar situation could be playing out in Singapore, where everyday Singaporeans may be struggling to meet their expectations and aspirations, while only focusing on surviving economic pressures.
He ended his speech by saying, “As the Government strategises on how to move forward in a new era, I hope the future Singapore will not be one where we worry about not being able to attract the rich & famous, or the largest and most profitable corporations, and hence have the average Singaporean shoulder a higher tax burden; I hope it will not be one where we have a shrinking middle class owing to income inequalities; and I hope it will be one where every Singaporean family can thrive.”