Tuesday, 26 September 2023

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Diluting the impact: How the impending S&CC increase waters down rebates meant for cushioning the 1% GST hike

It was reported that the People’s Action Party (PAP)-run town councils have announced that Service and Conservancy Charges (S&CC) will be increased over the next two years, impacting Housing Board (HDB) residents, commercial properties, and market and food stalls.

It was said that the decision was made in response to increase in energy prices, maintenance and manpower costs. The two-stage hike will begin on 1 July 2023, followed by a subsequent increase on 1 July 2024.

Monthly fees for HDB flats will rise by between S$0.70 to S$7.90 for the first increment and S$1 to S$9.10 for the second.

If we take an average, it will be roughly an increment of S$4.30 starting from 1 July and cumulatively S$9.30 from 1 July next year.

The charges will vary among PAP towns based on factors like the age and profile of estates, residents’ needs, and operating expenditures. Residents will be informed of the new rates by their respective PAP town councils.

Lim Biow Chuan, Coordinating Chairman for PAP town councils and Member of Parliament for Mountbatten SMC said that without the adjustment in S&CC rates, most PAP town councils were at risk of running a deficit and would have to dip into recent surpluses which are intended for the sinking funds of town councils.

Indeed, typically, PAP town councils hold large amounts of funds including surpluses. For example, in the case of Pasir Ris-Punggol Town Council, according to its FY 2021/22 Annual Report, it was holding S$178 million of funds at the end of 2022 or 7 percent more than the year before.

In 2021 it was holding S$166 million. Its funds included surpluses, sinking funds, life replacement funds and other project funds.

The announcement, which was made on 1 June, came less than 4 months after DPM Lawrence Wong in his mid-Feb Budget 2023 speech told everyone that the PAP government will be giving out rebates to HDB dwellers helping them to offset between 1.5 and 3.5 months of S&CC over 2023 which is part of the enhanced permanent GST Voucher scheme and Household Support Package announced at Budget 2023 to help Singaporeans tide over higher inflation and to cushion the impact of the GST hike.

Give then take back?

So, for dwellers living in 3 and 4-room HDB flats, they will be getting a rebate of 2.5 months of S&CC for this year.

According to a recent survey done by Dollars and Sense, dwellers living at a 3-room HDB flat are currently paying S&CC ranging from S$44.50 to S$48.00 a month, depending on the locality.

Hence, the total rebates 3-room HDB flat dwellers are getting back will be S$111.25 to S$120.00 this year or roughly about S$9.60 on average a month.

In summary, we can, however, conclude that 3-room HDB flat dwellers are getting rebates of roughly S$9.60 on average a month for this year while they will also be paying an increase of S$0.70 – 7.90 a month from 1 July this year and cumulatively S$1.70 – 17.00 from 1 July next year.

The extent of rebates, if any, that HDB dwellers will receive next year remains uncertain. This raises the question: what effect will the GST rebates have on HDB flat dwellers, especially considering the upcoming hike in S&CC?

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