Leong Mun Wai challenges DPM Wong on Govt’s compulsive squirrelling of surpluses, receives non-answer in Budget debate

Leong Mun Wai challenges DPM Wong on Govt’s compulsive squirrelling of surpluses, receives non-answer in Budget debate

In the Budget 2023 debate held on February 24, 2023, Non-Constituency Member of Parliament Leong Mun Wai of the Progress Singapore Party claimed that middle-class Singaporeans are overtaxed in relation to their income.

In his speech, Mr Leong cited the goods and services tax (GST) and the certificate of entitlement (COE) as indirect taxes that significantly affect the middle class.

However, Deputy Prime Minister and Finance Minister Lawrence Wong strongly rebuffed the statement, calling it an “outright falsehood.”

According to Mr Wong, Singapore’s middle class has enjoyed significant increases in real incomes over the past two decades compared to other advanced economies.

He highlighted that the median household real income growth in Singapore over the last decade was 3.2% per annum, which is higher than most other European and Asian societies.

Mr Wong further emphasized that Singapore’s overall tax burden, currently standing at 14% of GDP, is lower than most other advanced economies, even after factoring in the recent tax changes in this year and last year’s Budgets.

He stressed the need to focus on the overall taxes and benefits for the middle-income group, pointing out that the middle-income group in Singapore receives more in benefits than the taxes they pay.

Mr Wong explained that the middle 20% of Singaporeans receive about twice the amount of benefits compared to the taxes they pay, while upper-middle-income groups received roughly the same or slightly more in benefits compared to the taxes they pay.

Mr Wong highlighted that while the upper-middle-income group may not receive as much in direct cash benefits compared to the lower-income group, they have access to affordable housing, healthcare, and world-class education.

In response to Mr Wong’s statement, Mr Leong rejected the assertion and challenged Mr Wong to prove that he was not misleading Singaporeans.

Mr Leong highlighted that the calculation of tax-benefit and tax-income ratios in Singapore does not take into account the land cost paid by Singaporeans via HDB flat prices.

He argued that this gives the impression that the tax-benefit and tax-income ratios appear favourable for middle-class Singaporeans when, in fact, they are suffering under high land costs.

Mr Leong also accused the government of hoarding resources and pushing through tax increases like the GST, which affects middle-class Singaporeans.

He further highlighted that the increase in government expenditure from 75 billion to 100 billion between 2019 and 2023, which is 33 per cent, is concentrated in three ministries, namely the Ministry of Health, the Ministry of Education and the Ministry of Defence. He asked if Mr Wong could confirm if Singapore’s Gross Domestic Product (GDP) had grown similarly by that much as Mr Wong suggested in his speech that the hike in expenditure was in tandem with the growth in GDP.

Mr Leong then criticized the People’s Action Party government, saying that in its obsession with the reserves, it has lost its bearing.

He asked how the Affordable Homes Scheme (AHS) can be less equitable than the current Built-To-Order (BTO) system by the Housing Development Board when it only requires the flat buyer to pay for the construction cost for the flats while future generations of Singaporeans will have to worry about how high the flat prices would go under the BTO system. He argued that the government’s accusations of “raiding the reserves” with the AHS proposal were baseless.

Mr Leong pointed out that the NIRC is money that Singaporeans can spend as revenue after agreeing not to touch the reserves and plowing back 50% of the net investment return to the reserves. He added that most of the NIRC are being tucked away in endowment and trust fund issues.

He further criticized the government for taking away all these revenues and then telling Singaporeans that they do not have enough fiscal resources.

Mr Leong asked, “So can the DPM share with us how much NIRC has been tucked away in total to date and what percentage of debt we spend every year? It is even more insidious when the government, on one hand, take away all these revenues and then tell Singaporeans that we have not enough fiscal resources. As a result, I need to raise GST and other taxes.”

Following the approval of the GST hike in 2022, the tax has been increased to 8 per cent this year and will increase another per cent on 1 January 2024 to 9 per cent.

In response to Mr Leong’s series of questions and clarifications, Mr Wong simply pointed him to his earlier speech and did not provide the figures that Mr Leong sought.

When Mr Leong tried to seek further clarification from Mr Wong, the Deputy Speaker of Parliament stopped him and ended the session.

In a Facebook post later that evening, Mr Leong wrote, “It is clear that despite the calls by the Prime Minister that a credible Opposition should be able to put forward alternative policy ideas and proposals, this Government is not even debating those ideas and proposals constructively and in good faith in Parliament.”


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